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choli [55]
3 years ago
13

The return on the market portfolio is currently​ 12%. Mobile Phone Corporation stockholders require a rate of return of​ 30% and

the stock has a beta of 3.2. According to​ CAPM, determine the riskminus−free rate.
Business
1 answer:
Triss [41]3 years ago
5 0

Answer:

The risk free will be 3.82%

Explanation:

We post the CAPM formula and how given data

Ke= r_f + \beta (r_m-r_f)  

risk free             ?

market rate 0.12

premium market market rate - risk free ?

beta(non diversifiable risk) 3.2

Ke = 0.3

Now we post the know values and solve for risk free

0.3= risk-free + 3.2 (0.12 - riskfree)  

0.3 = risk-free + 3.2 \times 0.12 - 3.2riskfree

0.3 = 0.384 - 2.2riskfree

0.3-0.384 = -2.2riskfree

-0.084/-2.2= riskfree

risk free = 0.0381818181818182‬ = 3.82%

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alderwood company has provided the following information prior to any year-end bad debt adjustment: cash sales, $455,000 credit
nordsb [41]

If  sales discounts, $57,000 allowance for doubtful accounts credit balance, $3,800 alderwood prepares an aging of accounts receivable and the result shows that 5% of accounts receivable is estimated to be uncollectible. The bad debt expense is:$13,450.

<h3>How to determine the Bad debt expenses ?</h3>

First step is find the Required Balance using this formula

Required Balance =Accounts Receivables × Percentage of Uncollectible

Let plug in the formula

Required Balance =$345,000 × 5%

Required Balance =$17,250

Now let find the bad debt expenses using this formula

Bad debt expenses = Required Balance - Existing Credit Balance

Let plug in the formula

Bad debt expenses = $17,250 - $3,800

Bad debt expenses = $13,450

Therefore we can conclude that the Bad debt expenses  is the amount of $13,450.

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6 0
1 year ago
Jem Dons has three strategic business units (SBUs)-smartphones, healthcare, and accounting. Its smartphone unit is its most prof
Musya8 [376]

Answer:

Option A Stars

Explanation:

The reason is tha according to Boston Consulting Models the Business Units that possess high growth potential and this has been proven by capturing the market share with a good market share growth is Star. The business units like Star are the key to success and the businesses which possesses such business units must invest on it to expand its operation and further increase its market share to be a leader in the market.

3 0
3 years ago
If a bond's yield to maturity is less than its coupon rate, the bond will sell at a _____, and increases in market interest rate
KiRa [710]

If a bond's yield to maturity is less than its coupon rate, the bond will sell at a premium, and increases in market interest rates will decrease this premium.

If the bond's coupon rate is lower than YTM, the bond will be sold at a discounted price. If the bond's coupon rate is higher than its YTM, the bond is sold at a premium. If the bond's coupon equals YTM, the bond is sold at face value.

If the coupon is higher than the yield, investors should expect the bond's capital value to fall over the remaining term. Therefore, the price of the bond must be higher than its face value. If the bond's coupon rate is lower than its lifetime, the bond's price increases over its remaining lifetime.

If the interest rate falls below the coupon, the bond can be sold at a premium above face value. Interest rates on bonds vary according to prevailing interest rates and perceived risks of the issuer. Suppose he has a 10-year bond for $5,000 with a 5% coupon.

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7 0
2 years ago
(Appendix 11.1) Depreciation for Financial Statements and Income Tax Purposes Dinkle Company purchased equipment for $50,000. Th
Romashka-Z-Leto [24]

Answer and Explanation:

The computation is shown below:

For year 1

According to the Company's Books Depreciation

= (Orginal Cost - Salvage value) ÷ useful Life

= ($50,000 - $5,000)  ÷ 10 years

= $4,500

According to the Income Tax Depreciation

= Cost × MACRS Rate for Year 1

= $50,000  × 20%

= $10,000

So, the difference in year 1 is

= $10,000 - $4,500

= $5,500

For year 2

According to the Company's Books Depreciation

= (Orginal Cost - Salvage value) ÷ useful Life

= ($50,000 - $5,000)  ÷ 10 years

= $4,500

According to the Income Tax Depreciation

= Cost × MACRS Rate for Year 2

= $50,000  × 32%

= $16,000

So, the difference in year 1 is

= $16,000 - $4,500

= $11,500

7 0
3 years ago
Swifty Corporation has two divisions; Sporting Goods and Sports Gear. The sales mix is 65% for Sporting Goods and 35% for Sports
Rudiy27

Answer:

37.00%

Explanation:

The computation of the weighted average contribution margin ratio is shown below:

Particulars                    Sporting Goods Sports Gear Total

Contribution Margin Ratio 30%                    50%  

Sales Mix - Weights         65%                     35%  

Weighted Contribution Margin 19.50% 17.50% 37.00%

We simply multiplied the contribution margin ratio with the sales mix weighted so that the weighted contribution margin ratio could come

7 0
4 years ago
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