Answer:
The cost of equity based on the CAPM is 10.888%
Explanation:
The cost of equity of the stock or the required rate of return (r) is the minimum return required by investors to invest in a stock. The CAPM approach provides an equation to calculate the required rate of return (r) based on the risk free rate, stock's beta and the market risk premium. The formula for r is,
r = rRF + Beta * (rM - rRF)
Where,
- rRF is the risk free rate or rate on T bills
- rM is the expected return on market
r = 0.042 + 0.88 * (0.118 - 0.042)
r = 0.10888 or 10.888%
Answer:
1. Private ownership of factors of production
2. Freedom to engage in commercial activities
Explanation:
<u>1. Private ownership of factors of production</u>
In the US, individuals and firms are allowed to own properties. A significant percentage of the factors of production are in the hands of the private sector. Firms and individual influences the production of goods and services because they allocate resources to meet market demand.
<u>2. Freedom to engage in commercial activities</u>
Entrepreneurs have the freedom to choose the type of business they want to start. They can also select the location and the time they want to operate. There are no upper limits to firms that can participate in the market. Consumers are free to choose their suppliers. The market presents a variety of goods and services to consumers to pick from.
The price of an item refers to the assignment of value, or the amount the consumer must exchange to receive the offering or product.
Whether you are purchasing a service or a good you are going to pay a price for that item. The price is determined by the organization as what the expect a consumer to willingly pay. The price is often determined by the value the service or good holds in the eyes of the consumer.
Answer:
the first question is progressive
Explanation:
because if you look at the table it shows that the tax rate went up 2 %
Answer:
Return on the investment = 10.8%
Explanation:
<em>The return on a stock is the sum of the capital gains(loss) plus the dividends earned.</em>
<em>Capital gain is the difference between he value of the stocks when sold and the cost of the shares when purchased.</em>
Total shareholders Return =
(Capital gain/ loss + dividend )/purchase price × 100
So we can apply this to the formula:
Dividend = 1.8 × 340= $612
Capital gain = (83.54-77.03)× 340 =$ 2213.4
Cost of shares = 340 × 77.03= $26,190.2
% return = (612 + 2213.4)/ 26,190.2 × 100
= 10.8%
