Which of the following are common trade promotion tools?A. Rebates, discounts, free goods, and allowances.B. Discounts, free
1 answer:
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Answer:
11.11%
Explanation:
<em><u>The full question with table is attached.</u></em>
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We need the rate of return formula using Capital Asset Pricing Model (CAPM). The formula is:
Where
R is rate of return (what we need)
is risk-free return rate (5% = 0.05)
is the market rate of return (11% = 0.11)
To get , we take the weighted average of the portfolio.
Weight of Stock A = 1,075,000/3,000,000 = 0.3583
Weight of Stock B = 675,000/3,000,000 = 0.225
Weight of Stock C = 750,000/3,000,000 = 0.25
Weight of Stock D = 500,000/3,000,000 = 0.1667
Portfolio Beta = (0.3583*1.2) + (0.225*0.50) + (0.25*1.40) + (0.1667*0.75) = 1.02
Now, we calculate rate of return using CAPM formula:
That is 11.12%, or from answer choice, it is <u>11.11%</u>
Answer: Project X
Explanation:
The Payback period is the amount of time it would take for the cash inflows accruing from an investment to payoff the cost of the investment.
Project X has a constant cashflow of $24,000 for 3 years and a cost of $68,000 for the Payback period is;
= 68,000/24,000
= 2.83 years
Project Y has an uneven cash flow with a cost of $60,000. Payback is calculated as;
= Year before payback + Amount left to be paid/cashflow in year of payback
Year before payback = 4,000 + 26,000 + 26,000
= $56,000
This means that the third year is the year before payback.
60,000 - 56,000 = $4,000
Payback period = 3 + 4,000/20,000
= 3.2 years
Based on a Payback period of 3 years, only Project X should be chosen as it pays back in less than 3 years.
