Answer:
Average real risk free rate = (1 + Nominal risk free rate / 1 + Inflation rate ) - 1
= (1 + 5% / 1 + 1.5%) - 1
= 1.0345 - 1
= 0.0345
= 3.45%
Average return on stock = Sum of annual returns / Number of years
= 13% + (-8%) + 16% + 16% + 10% / 5
= 0.47 / 5
= 0.094
= 9.40%
Average real returns = (1 + Average return on stock / 1 + Inflation rate) - 1
= (1 + 9.40% / 1 + 1.5%) - 1
= 1 + 0.0940 / 1 + 0.015) - 1
= 1.077832512 - 1
= 0.077832512
= 7.78%
Average real risk premium = Average real return - Average real risk free rate
Average real risk premium = 7.78% - 3.45%
Average real risk premium =4.33%
Answer:
$820,000
Explanation:
The computation of the firm's levered value is shown below:
Value of levered firm = Value of unlevered firm + Debt × tax -PV (financial distress)
Value of levered firm = $800,000 + $200000 × 35% - $800,0000 × (25%)^2
= $820,000
The 25% is come from
= $200,000 ÷ $800,000
= 25%
We simply applied the above formula to determine the levered value
The flow of input data for budgeting<span> should begin with the lower levels of management in order to </span>assure<span> better management acceptance. Lower level management is otherwise known as supervisory or operative level of management. This level consists of supervisors, superintendents, or </span>foremen.
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Answer:
No, they dont have to hold the 100%.
Explanation:
Because banks use the money deposited to make loans to other clients. By general rule the Commercial Banks are required to keep only the 10% of each deposit made in an account.
Answer:
$7,500
Explanation:
Calculation for the Depreciation of rah second year of the asset's life
Second year depreciation=(1/8 years*2)*[($40,000)-(1/8 years*2* $40,000)]
Second year depreciation=(0.25)*[($40,000)-(0.25*$40,000)]
Second year depreciation=(0.25)*[($40,000-$10,000)]
Second year depreciation=0.25*$30,000
Second year depreciation=$7,500
Therefore the Depreciation of rah second year of the asset's life using the double-declining-balance method is: $7,500
