Answer:
Stock Y is overvalued and Stock Z is undervalued.
Explanation:
The stock is fairly valued when the required rate of return on the stock is equal to its expected return. If the expected return on the stock is more than the required rate of return, the stock is undervalued and vice versa.
The required rate of return on the stock is calculated under the CAPM approach suing the following formula.
r = rRF + Beta * rpM
Where,
- rRf is the risk free rate
- rpM is the risk premium on market
r of Stock Y = 0.052 + 1.3 * 0.077 = 0.1521 or 15.21%
The required rate of return of Stock Y (15.21%) is more than its expected rate (14.9%) which means the stock is overvalued.
r of Stock Z = 0.052 + 0.95 * 0.077 = 0.12515 or 12.515%
The required rate of return of Stock Z (12.515%) is less than its expected rate (12.8%) which means the stock is undervalued.
Notes payable is the only other item on the balance sheet. notes payable must equal total assets.
<h3>What is Notes payable?</h3>
Notes payable can be described as the long-term liabilities which help to show the money a company is owning the financiers.
It should be noted that this financier could be banks and other financial institutions , however they are long-term because they are payable beyond 12 months, hence Notes payable is the only other item on the balance sheet. notes payable must equal total assets.
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Answer:C. . Both should be promoted equally because they have the same contribution margin per unit.
Explanation:
Contribution on a product is the difference between the sales price and the variable cost per unit. A good that contributes positive contribution is viable for production.
Both product should be produce since they have the same contribution ratio and margin per unit.
Based on the original cost of the machine and the accumulated depreciation, the gain on the machine is -$3,000.
<h3>What is the gain on the machine?</h3>
First find the netbook value of the machine:
= Cost of machine - accumulated depreciation
= 38,000 - 20,000
= $18,000
The gain or loss is:
= Selling price - Net book value
= 15,000 - 18,000
= -$3,000
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Answer:
Limited role of government
Explanation:
Apex- Econ