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ella [17]
2 years ago
8

Epley Industries stock has a beta of 1.25. The company just paid a dividend of $.40, and the dividends are expected to grow at 5

percent. The expected return on the market is 12 percent, and Treasury bills are yielding 5.8 percent. The most recent stock price for the company is $75. a. Calculate the cost of equity using the DCF method. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) DCF method % b. Calculate the cost of equity using the SML method.
Business
1 answer:
Volgvan2 years ago
6 0

Answer:

A. 5.56%

B. 13.55%

Explanation:

In this question, we are asked to calculate the equity cost using the DCF method and the SML method

A. DCF approach

cost of equity =[ D0(1+growth )/ current price] +growth

= [.40 (1+.05) / 70 ] + .05

= [ .42 / 75] + .05

= .0056 +.05

= 0.0556 same as 5.56%

B)SML approach

Cost of equity = Rf +Beta (Rm-Rf)

= 5.8+ 1.25 (12 -5.8 )

= 5.8+ 1.25 *6.2

= 5.8 + 7.75

= 13.55%

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Which of the five broad definitions of public opinion involves "rhetorical construction"?
Alexxandr [17]

Answer: Fiction

Explanation: According to some theorists, public opinion is a rhetorical construction. This means that it is a phantom, having no real link to "the public" as citizens. These theorists go on to claim that politicians and journalists tend to state that public opinion regarding a certain issue is concluded without any available evidence, or public's influence. However this is only one form of the definition of public opinion.

Other types of definitions include:

Public opinion is an aggregation: Journalists and politicians claim public opinion is the total of a lot of individual opinions.

Public opinion reflects the majority's beliefs: Theorists claim that public opinion is the equivalent of the values and beliefs of the majority.

Public opinion is discovered in groups clashing: Some theorists believe public opinion lies in power dynamics within a group, and how it coexists, or fails to do so, with other groups.

Public opinion reflects media: Theorists believe that public opinion is best gathered from what politicians, journalists and other influential elites believe.

6 0
3 years ago
A company produces a cardboard box in the shape of a cube. The surface area of the box is represented by S=6x2, where x is the e
nydimaria [60]

Answer:

x = \sqrt{\frac{S}{6} }  or ( \frac{S}{6} )^{\frac{1}{2} }

Explanation:

The cardboard box is in the shape of a cube. The surface area of the box is given by:

S = 6x^{2}

To find the inverse, we have to solve for x. To solve for x means we will make x the subject of the equation above

Divide both the right and left hand side by 6, we have:

6x^{2} ÷ 6 = S ÷ 6 ⇒ x^{2} = \frac{S}{6}

x^{2} = \frac{S}{6}

Take the square root for both the right and left hand side, we have:

\sqrt{x^{2} } = \sqrt{\frac{S}{6}} ⇒ x =  \sqrt{\frac{S}{6}}

x = \sqrt{\frac{S}{6} }  or  ( \frac{S}{6} )^{\frac{1}{2} }

Therefore, x is equivalent to the square root of (S/6)

7 0
3 years ago
Read 2 more answers
Milk has an inelastic demand, and beef has an elastic demand. Suppose that a mysterious increase in bovine infertility decreases
makkiz [27]

Answer:

b. greater in the beef market than in the milk market.

Explanation:

Elasticity of demand measures the responsiveness of quantity demanded to changes in price.

Demand is elastic if quantity demanded is more sensitive to changes in price. A small change in price leads to a greater change in quantity demanded.

Demand is inelastic if when price changes, there is little or no change in quantity demanded.

If there's bovine fever which decreases the population of beef cattle by 50 percent, supply would fall and price would rise. As a result of the rise in price, quantity demanded of beef would fall more than the quantity demanded of milk because beef has an elastic demand while milk has an inelastic demand.

I hope my answer helps you

7 0
3 years ago
The management of Unter Corporation, an architectural design firm, is considering an investment with the following cash flows: Y
nordsb [41]

Answer:

The payback period of the investment is 6.5 years

Explanation:

1. In order to calculate the payback period of the investment we would have to make the following calculation:

payback period of the investment=Year before full recovery+(Unrecovered cost at the  start/cash flow during the year )

payback period of the investment=6+  ($23,000−$20,500) /$5,000

payback period of the investment=6.5 Years

The payback period of the investment is 6.5 years

​

5 0
3 years ago
Purchasing a building for $ 105 comma 000 by paying cash of $ 25 comma 000 and signing a note payable for $ 80 comma 000 will A.
kherson [118]

Answer:

C. increase both total assets and total liabilities by $ 80,000.

Explanation:

Before the purchase:

Cash $25,000

Net Actives: $25,000

After the purchase:

Buildings $105,000  

Notes Payable $80,000

Net Actives: $25,000

The total increase of the total active comes with an increase in the debts too, both in 80,000.

6 0
3 years ago
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