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tresset_1 [31]
3 years ago
8

Thayer Farms stock has a beta of 1.38. The risk-free rate of return is 3.87 percent, the inflation rate is 3.93 percent, and the

market risk premium is 9.03 percent. What is the expected rate of return on this stock?A. 8.35 percent B. 9.01 percent C.10.23 percent D.13.21 percent E. 13.73 percent
Business
1 answer:
KATRIN_1 [288]3 years ago
8 0

Answer:

Cost of Equity  16.33%

Explanation:

We solve for this using CAMP:

Ke= r_f + \beta (r_m-r_f)

risk free = 0.0387

premium market = (market rate - risk free) 0.0903

beta(non diversifiable risk) = 1.38

Ke= 0.0387 + 1.38 (0.0903)

Ke 0.16331 = 16.33%

We are given with the risk free rate of return and the market premium already so we just need to plug into the formula to solve for the expected return on the stock.

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Which of the following is an entrepreneur?a lawyer in a high-profile law firm that specializes in business law an artist who run
boyakko [2]
<h3><u>Answer;</u></h3>

An artist who runs a business that paints murals in office buildings and restaurants

<h3><u>Explanation;</u></h3>
  • <em><u>An entrepreneur is an individual who organizes or operates a business or a business venture by identifying an opportunity in the market. The entrepreneur starts a business by risking his/her own money for the business venture.</u></em>
  • We can say that an entrepreneur combines the factors of productions, that is land, labor, and capital to produce products. He or she has the capacity and willingness to develop, organize and manage a business venture along with any of its risks for the purpose of making profit.

6 0
3 years ago
To maintain balance in a project with a fixed budget and a well-defined scope, a project team will require flexibility _________
KiRa [710]

Answer:

a. with the deadline

Explanation:

When a project has a fixed budget, it cannot move its expenditure as that shall be fixed, for fixed as well as variable cost, in total no increase in expenditure.

In no terms the project will be successful if it does not meet the quality, thus the quality standards shall not be adjusted.

The risks associated with the project can not be altered.

The goals of business shall not be altered for small projects as generally the goals are long term in nature.

Therefore, correct option is

a. with the deadline

As the deadline can be altered or revised a little to meet the expectations.

7 0
3 years ago
5. Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses
gogolik [260]

Question Completion:

Due to erratic sales of its sole product - a high capacity battery for laptop computers - PEM, Inc., has been experiencing difficulties for some time.  The contribution format income statement for the most recent month is given as follows:

Sales (19,500 units at $30 per unit) $585,000

Variable expenses                              409,500

Contribution margin                             175,500

Fixed expenses                                    180,000

Net operating margin                           ($4,500)

Answer:

PEM, Inc.

a1) New CM ratio = 40%

a2) Break-even point in unit sales and dollars sales

i) Break-even point in unit sales = Fixed Expenses/Contribution per unit

= $237,000/$12

= 19,750 units

ii) Break-even point in dollars sales = Fixed Expenses/Contribution margin ratio

= $237,000/0.4

= $592,500

b. Contribution format income statements, based on sales of 20,800 units:

                                                             Without                With

                                                         Automation         Automation

Sales (20,800 units at $30 per unit) $624,000    $624,000 (20,800 * $30)

Variable expenses (20,800 at $21)     436,800       374,400 (20,800 * $18)

Contribution margin (20,800 * $9)      187,200       249,600 (20,800 * $12)

Fixed expenses                                    180,000       237,000

Net operating margin                            $7,200       $12,600

c) I would recommend that the company should automate its operations.  It will generate more net operating margin, equal to $5,400 ($12,600 - $7,200), when it automates than when it does not, assuming that it expects to sell 20,800 units.  

Explanation:

a) Data and Calculations:

Variable expenses reduction = $3 per unit

Old variable expenses per unit = $21 ($409,500/19,500)

New variable expenses per unit = $18 ($21 - $3)

New variable expenses = $351,000 ($18 * 19,500)

New Contribution Margin per unit = $12 ($30 - $18)

New Contribution margin ratio = $12/$30 * 100 = 0.4 or 40%

Old Fixed Expenses = $180,000

New Fixed Expenses = $237,000 ($180,000 + $57,000)

4 0
2 years ago
Tennies Clinic uses client-visits as its measure of activity. During November, the clinic budgeted for 3,700 client-visits, but
Viefleur [7K]

Answer:

The correct answer is $814 Unfavorable because actual medical supplies is more than standard.

Explanation:

Actual Medical Supplies                                         $26,768

Standard Medical Supplies for Actual Activity            $25,954

(6.60*3,690+1,600)

Medical Supplies Spending Variance                          814 Unfavorable

Therefore, The correct answer is $814 Unfavorable because actual medical supplies is more than standard.

3 0
3 years ago
Malaysia and Laos are members of the same trading bloc that promotes trade and economic integration among member nations in the
Mademuasel [1]

Answer:

The Association of Southeast Asian Nations (ASEAN)

Explanation:

The Association of Southeast Asian Nations (ASEAN) is a regional intergovernmental organization comprising of Singapore, Brunei, Malaysia, Thailand, Philippines, Indonesia, Vietnam, Laos, Cambodia, and Myanmar. It promotes intergovernmental cooperation and facilitates economic, political, security, military, educational, and sociocultural integration among its members and other countries in Asia.

3 0
2 years ago
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