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White raven [17]
3 years ago
12

Mikkelson Corporation's stock had a required return of 12.50% last year, when the risk-free rate was 3% and the market risk prem

ium was 4.75%. Then an increase in investor risk aversion caused the market risk premium to rise by 2%. The risk-free rate and the firm's beta remain unchanged. What is the company's new required rate of return
Business
1 answer:
hoa [83]3 years ago
7 0

Answer:

Beta = 2

New required rate of return = 16.50%

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)

12.50% = 3% + Beta × 4.75%

12.50% - 3% = Beta × 4.75%

So, the beta would be 2

The (Market rate of return - Risk-free rate of return)  is also known as the market risk premium

Now the required rate of return would be

= 3% + 2 × 6.75%

= 3% + 13.50%

= 16.50%

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Amherst City provides a defined benefit pension plan for employees of the city electric utility, an enterprise fund. Assume that
Sever21 [200]

Answer:

Dr Service cost 245,000

Cr Interest 166,400

Cr Cash 411,400

Dr Plan assets - pension 411,400

Cr Service cost 245,000

Cr Interest 166,400

Explanation:

Preparation of the journal entries to record annual pension expense for the enterprise fund of Amherst City

Since we are Assuming that the plan investments was $184,300 while the service cost component is the sum of $245,000, and interest on the pension liability is the sum of $166,400 for the year this means the Journal entries to record annual pension expense for the enterprise fund of Amherst City will be:

Dr Service cost 245,000

Cr Interest 166,400

Cr Cash 411,400

(245,000+166,400)

Dr Plan assets - pension 411,400

(245,000+166,400)

Cr Service cost 245,000

Cr Interest 166,400

4 0
3 years ago
22. Which one of the following is correct regarding the utilization of a good without an alternative use?
photoshop1234 [79]

Answer:

it's 2 opportunity cost will increase

thank uh

8 0
1 year ago
Gambrinus is a large company that owns and operates the breweries that produce Moosehead Lager, Bridgeport Ale, Pete's Wicked Al
svlad2 [7]

Answer:

The answer is departmentalization by product.

Explanation:

Departmentalization refers to the divisions of different work areas. Each one specializes in a specific job, most companies use departmentalization and train their employees, making them specialists in their role.

The main objective of departmentalization is to specialize in activities and facilitate processes while maintaining control in the organization. The departmentalization is usually divided by product, function, process, project, clients, and territory.

For example, in the case of departmentalization by-products, it is used by large companies to divide the area where the product is developed and those in charge of product delivery, thus obtaining better control, organization, and production.

<em>I hope this information can help you.</em>

7 0
3 years ago
Carolyn owns a small business that designs air conditioning units for large buildings. A construction company that's building an
guajiro [1.7K]

Carolyn should contact them and offer her services on the job, furthermore she should set a meeting to discuss the specifics of the project.

8 0
3 years ago
Read 2 more answers
Olive Corporation has two divisions, Pressing and Extracting. The company's primary product is Lavender Oil. Each division's cos
Alex777 [14]

Answer:

$15,000

Explanation:

Operating income is the difference between the net sales or revenue generated by a business and the operating expenses of the business.

The operating expenses of the business may be classified into 2 groups namely the fixed and variable costs.

The total operating cost of the business

= ( $9 + $6 + $28 + $32) per barrel

= $75

operating income of both divisions

= 200 ( $150 - $75)

= 200 * $75

= $15,000

5 0
3 years ago
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