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-Dominant- [34]
3 years ago
5

Eaton Electronic Company’s treasurer uses both the capital asset pricing model and the dividend valuation model to compute the c

ost of common equity (also referred to as the required rate of return for common equity). Assume: Rf = 3 % Km = 6 % β = 1.1 D1 = $ 0.50 P0 = $ 15 g = 5 % a. Compute Ki (required rate of return on common equity based on the capital asset pricing model). (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
Business
1 answer:
Montano1993 [528]3 years ago
4 0

Answer:

Ki = 0.063 or 6.30%

Explanation:

The CAPM or Capital asset pricing model is an approach to calculate the required rate of return of a stock. The required rate of return or cost of equity is the minimum return required by the investors o invest in a stock based on the systematic risk of the stock. The formula to calculate the required rate of return of a stock using the CAPM is,

Ki = Rf + β * (Km - Rf)

Where,

  • Rf is the risk free rate
  • β is the beta of the stock
  • Km is the expected return on the market

Ki = 0.03 + 1.1 * (0.06 - 0.03)

Ki = 0.063 or 6.3%

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Which of these individuals is an entreneur ?
wlad13 [49]

Answer:

A. a computer programmer who starts her own software Company

Explanation:

Entrepreneurship is the process through which new businesses are started. An entrepreneur is a person who takes risks by committing their time and resources to start a business.

The computer programmer is the entrepreneur in this case. She is starting a new software business. Other than her computer skills, she will need to be creative and innovate to develop products that will appeal to customers. She will take all risks of her new business but also stand to enjoy its success.

7 0
3 years ago
Freedom of enterprise Multiple Choice in a market system means that entrepreneurs can obtain and use economic resources without
Zina [86]

Answer: allows businesses, within broad limits, to choose what goods to produce

Explanation:

Free enterprise also referred to as the free market is a form of economy whereby prices, services and products, are determined by the market, and not the government. In free enterprise, the susinesses and services are free from the control of the government.

Things that are free means they are unconstrained, while a business means an enterprise. Therefore, the free enterprise is an economy whereby the businesses are free from the control of the government.

8 0
2 years ago
All of the following are disadvantages of outsourcing a product​ except: A. outsourcing allows the company to focus on its prima
devlian [24]

Answer:

A. outsourcing allows the company to focus on its primary function

Explanation:

  • The companies outsource to cut the labor costs and these include the salaries and the personal overheads and primarily used by these companies to focus on the core aspects of business.
  • To delegate the company's business to third parties and to the external agencies and improve the quality production and innovation.
6 0
3 years ago
If muffins and bagels are substitutes, a higher price for bagels would result in:
Alexandra [31]
Answer: a) increase in the demand for bagels

If muffins and bagels are substitutes, a higher price for bagels would result in a(n)

a) increase in the demand for bagels
b) increase in the demand for muffins
c) decrease in the demand for muffins
d) none of the above
b) increase in the demand for muffins
7 0
3 years ago
The Berkel Corporation manufactures Widgets, Gizmos, and Turnbols from a joint process. June production is 5,000 widgets; 8,750
igor_vitrenko [27]

Answer:

Allocated join cost = $66,176.47  

Explanation:

<em>The joint cost is allocated using sales. This is done by using the proportion of sales of the total which is attributed to the sales value of widget</em>

Total sales value of the three products=

(75  × 5,000) + ($50×  8,750) + ( $25×  10,000)= 1,062,500

Joint cost = $187,500.

Joint costs allocated to Widget

=  (75  × 5,000)/1,062,500  ×  $187,500. =  66,176.47  

Allocated join cost =$66,176.47  

8 0
2 years ago
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