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Makovka662 [10]
3 years ago
12

2. Business and financial risk The impact of financial leverage on return on equity and earnings per share Consider the followin

g case of Lost Pigeon Aviation: Suppose Lost Pigeon Aviation is considering a project that will require $400,000 in assets. • The project is expected to produce earnings before interest and taxes (EBIT) of $40,000. • Common equity outstanding will be 10,000 shares. • The company incurs a tax rate of 35%. If the project is financed using 100% equity capital, then Lost Pigeon Aviation’s return on equity (ROE) on the project will be
Business
1 answer:
Anarel [89]3 years ago
4 0

Answer:

Return on equity = 6.5%

Explanation:

<em>Return on equity (ROE) is the proportion of the equity capital that is earned as net profit. This is calculated using the formula below:</em>

Return on equity = Profit after tax / equity value × 100

Profit after tax =( EBIT - interest)× (1-T)

Profit after tax =  (40,000 - 0)× (1-0.35) = 26,000

The total worth of equity would be equal to the cost of the assets . This is so because it project is financed entirely by equity.

Hence worth of equity = $400,000

Return on equity =  (26,000 /400,000) × 100 =6.5%

Return on equity = 6.5%

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PolarNik [594]

Answer:

market premium = 0,0781 = 7.81%

Explanation:

We have to calculate the market return and then calcualte the premium as the difference between the expected return on the market and the risk-free rate:

We multiply each outcome by the stock weight. and then for the probability of occurence of that state of economy

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0.25    x    (0.45 x 0.15 + 0.45 0.27 + 0.1 x 0.05) = 0.05

\left[\begin{array}{cccccc}Stock&&B&A&C&Totals\\Weights&&0,45&0,45&0,1&&Boom&0,25&0,15&0,27&0,11&0,05&Normal&0,65&0,11&0,14&0,09&0,078975&bust&0,1&-0,04&-0,19&0,05&-0,00985&&&&&return&0,119125&\end{array}\right]

market expected return 0,1191

Market premium: 0,1191 - 0,041 = 0,0781

5 0
2 years ago
How long does it take for tax return to be deposited?.
Lostsunrise [7]

Answer:

about six to eight weeks

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If you file a complete and accurate paper tax return, your refund should be issued in about six to eight weeks from the date IRS receives your return. If you file your return electronically, your refund should be issued in less than three weeks, even faster when you choose direct deposit.

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Elden [556K]

Answer:

The best allocation base for assembling activities costs are the number of parts actually assembled.

Since the number of parts is not an option int his question, the second best allocation base for the assembling process is A) direct labor hours.

If the process is highly automated, then the second best allocation base would be machine hours, but that isn't an option either.

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The use of current employees as brand ambassadors can be the way that one would  use to attract participants to the Techtonic Academy, and apprenticeship programs.

<h3>What is meant by recruiting sources?</h3>

This is the term that is used to refer to the way that a business would be able to get other workers to be on board in that particular firm. One of the ways that this is done is through the use of the people that currently work in the given establishment.

Hence the The use of current employees as brand ambassadors can be the way that one would  use to attract participants to the Techtonic Academy, and apprenticeship programs.

Read more on recruitment here: brainly.com/question/1446509

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LO 8.4What is the main difference between a flexible budget and a master budget?
zhannawk [14.2K]

Answer:

Flexible budget and master budget are very different.

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The "master budget" is the sum of all the budgets that are prepared by a company's various departments. They include financial statements that are budgeted, a financing plan and a cash forecast. They are based on one specific level of production.  

A "flexible budget" is a budget that changes or adjusts when the level of activity changes. They are dynamic in nature and can be operated on many levels of output. It is realistic and not based on assumption.

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