Answer:
13.64%
Explanation:
In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below
Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)
= 4.8% + 1.7 × (10% - 4.8%)
= 4.8% + 1.7 × 5.2%
= 4.8% + 8.84%
= 13.64%
The (Market rate of return - Risk-free rate of return) is also called market risk premium
Answer:
The new cost of capital if this firm changes capital structure is 1.3
Explanation:
From the provided information:
All equity beta = 1
New D/E ratio = 0.5
Then, the new capital structure with levered beta is given by:
new capital structure = All equity beta *(1 + D/E*(1 - tax rate))
= 1*(1 + 0.5*(1 - 40%))
= 1.3
Therefore, The new cost of capital if this firm changes capital structure is 1.3
Answer:
It's Best to Pay Your Credit Card Balance in Full Each Month
Explanation:
Leaving a balance will not help your credit scores—it will just cost you money in the form of interest. Carrying a high balance on your credit cards has a negative impact on scores because it increases your credit utilization ratio.
Answer:
$22,500
Explanation:
Chance of getting low quality car = 50%
Chance of getting high quality car = 50%
Cost of low quality car = $15,000
Cost of high quality car = $30,000
So, Price of the car = 50% of lower quality + 50% of higher quality
= (50% × $15,000) + (50% ×30,000)
= $7,500 + $15,000
= $22,500
Hence, price of the used car will be $22,500.
Answer:
As a result of the price floor, price would increase. As a result, quantity demanded will decrease and the quantity supplied would increase.
Supply would exceed demand and as a result there would be an excess supply of fish.
As an alternative to the price floor, the government can subsidise the cost of fishing. This would reduce the cost of producing fish
Explanation:
A price floor is when the government or an agency of the government sets the minimum price of a product. A price floor is binding if it is set above equilibrium price.
