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Tatiana [17]
3 years ago
9

Find the expected return for Jackson Corporation. Round to the nearset hundredth percent. Answer in the percent format. Do not i

nclude % sign in your answer (i.e. If your answer is 4.33%, type 4.33 without a % sign at the end.)
Business
1 answer:
Maksim231197 [3]3 years ago
5 0

Question:

Jackson Corporation has expected return of 12% during recession, 20% during normal, and 40% during boom state of economy. Probability of recession, normal and boom states of economy is 0.25, 0.50, and 0.25 respectively. Find the expected return for Jackson Corporation. Round to the nearset hundredth percent. Answer in the percent format. Do not include % sign in your answer (i.e. If your answer is 4.33%, type 4.33 without a % sign at the end.)

Answer:

23.00

Explanation:

Given:

For Jackson Corporation:

Expected return during recession = 12%

Expected return during normal = 20%

Expected return during boom = 40%

For Economy:

Probability of recession = 0.25

Probability of normal = 0.50

Probability of boom = 0.25

Required:

Find the expected return for Jackson Corporation.

To find expected return, use the expression below:

Expected return = (Probability of Recession * Returns at Recession) + (Probability of Normal * Returns at Normal) + (Probability of Boom * Returns at Boom)

Using the expression above, expected return for Jackson corporation will be calculated as:

Expected return = (25×12%)+(0.50×20%)+(0.25×40%)

= 3 + 10 + 10

= 23%

Expected return for Jackson corporation is 23.00

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Answer:

(2) 4%

Explanation:

The portfolio is considered to be less risky if its volatility is low. The higher standard deviation the more risky is the project. For Duke Energy and Microsoft the investment portfolio required is risk free investment. To calculate the risk free rate we calculate using the formula;

Var Rp = x1 2Var R1 + x2 2Var R2 +2 x1 x2 Corr (R1, R2) SD1 SD2

Var Rp = 0.14 + 0.44 + 2 (1) * (-1) * 6% * 24%

Solving for this we get the risk free investment at 4%.

3 0
3 years ago
Saving is:a) the difference between real GDP and disposable income while savings is the difference between disposable income and
Bogdan [553]

Answer:

b

Explanation:

Saving is the difference between disposable income and consumption

Saving = disposable income - consumption

for example, if disposable income is $1000 and consumption is $600. Saving is $400

the higher consumption is, the lower saving would be. the lower consumption is, the higher saving would be

Savings is the total amount of money saved over a period of time

3 0
3 years ago
Marlin Corporation reported pretax book income of $1,003,000. During the current year, the net reserve for warranties increased
Maksim231197 [3]

Answer:

Explanation:

pretax book income 1,003,000

warranties increased 25,600

depreciation exceeded tax depreciation 100,300

dividends received deduction -15,300

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In order to find income tax expense or benefit, multiply the taxable amount by tax rate.

7 0
3 years ago
Read 2 more answers
Vaughn Manufacturing purchased equipment for $15300 on December 1. It is estimated that annual depreciation on the computer will
ki77a [65]

Answer:

The correct answer is option (E).

Explanation:

According to the scenario, computation of the given data are as follows:

Equipment = $15,300

Estimated annual depreciation = $3,060

Time period = 1 month

So, Depreciation = $3,060 × 1 ÷ 12

= $255

So, Here journal entry are as follows:

Depreciation A/c Dr $255

To Accumulated depreciation A/c $255

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4 0
3 years ago
You have just purchased a new car! You made a down payment of $5,000 and financed the balance. According to the purchase agreeme
erik [133]

Answer:

The correct answer is C.

Explanation:

Giving the following information:

The down payment of $5,000 and financed the balance. According to the purchase agreement, you must pay $600/month for four years, beginning one month from today. The credit agreement is based on an annual interest rate of 12%.

First, we need to calculate the final value of the monthly payment.

FV= {A*[(1+i)^n-1]}/i

A= annual deposit= 600

i= 0.12/12= 0.01

n= 12*4= 48

FV= {600*[(1.01^48)-1]}/0.01= 36,733.56

Now, we calculate the present value:

PV= FV/ (1+i)^n= 36,733.56/ (1.01^48)= 22,784

Total cost= 22,784 + 5,000= $27,784

8 0
3 years ago
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