1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
storchak [24]
3 years ago
6

The risk-free rate of return is 3% and the expected return on the market portfolio is 14%. Oklahoma Oilco has a beta of 2.0 and

a standard deviation of returns of 26%. Oilco's marginal tax rate is 35%. Analysts expect Oilco's net income to grow by 12% per year for the next 5 years. Using the capital asset pricing model, what is Oklahoma Oilco's cost of retained earnings?A) 25.0% B) 22.8% C) 21.2% D) 18.6%
Business
1 answer:
Monica [59]3 years ago
8 0

Answer:

25%

Explanation:

Data provided

Risk free return = 3%

Beta = 2

Expected return on the market portfolio = 14%

Risk-free rate of return = 3%

The computation of cost of retained earnings is shown below:-

Cost of retained earnings = Risk free return + Beta × Risk premium

=  3% + 2 × (14% - 3%)

=  3% + 2 × 11%

=  3% + 0.22

= 25%

Therefore, for computing the cost of retained earning we simply applied the above formula.

You might be interested in
what is an everyday example of scarcity that demonstrates why scarcity is a basic economic problem that faces society?
zhannawk [14.2K]

of every day scarcity could it be how the desert doesn't really have water so the desert has a scarcity of water scarcity is a basic economic problem that Society faces because the world sometimes runs out of things that we need so certain people have to make loopholes to get to get around them another example is how during the coronavirus we had a scarcity of sanitizer Clorox wipes bleach and toilet paper

7 0
3 years ago
DeWitt Industries has adopted the following production budget for the first 4 months of 2017. Month Units Month Units January 10
brilliants [131]

Answer:

DeWitt Industries

Materials Purchase Budget for the first quarter:

                                   January      February     March

Ending inventory          1,648            1,038           824

Production

requirements            31,320         24,720       15,570

Beginning inventory   9,500            1,648         1,038

Purchases (pounds)  21,820         23,072       14,532

Explanation:

a) Data and Calculations:

Production Budget

Month        Units

January    10,440

February   8,240

March        5,190

April          4,120

                               January      February     March       April

Production Units     10,440          8,240        5,190      4,120

Production

requirements        31,320        24,720       15,570   12,360

Materials Purchase Budget

                                   January      February     March       April

Ending inventory          1,648            1,038           824

Production

requirements            31,320         24,720       15,570      12,360

Beginning inventory   9,500            1,648         1,038           824

Purchases (pounds)  21,820         23,072       14,532       11,536

4 0
3 years ago
What type of corporate speech can be fully regulated?
Stels [109]

Answer: The correct answer is "(A) Advertising".

Explanation: The publicity for its diffusion and consequences in front of third parties and legal regime is the type of corporate discourse that can be completely regulated with the aim of not causing damage to the rights of potential consumers.

8 0
3 years ago
Read 2 more answers
National Express reports the following costs and expenses in June 2020 for its delivery service. Indirect materials $7,100 Drive
FrozenT [24]

Answer:

a. Delivery service (product) costs = $44,120

b. Period costs = $20,560

Explanation:

a)                Delivery service (product) costs  

Indirect materials                                   $7,100

Depreciation on delivery equipment   $11,900

Dispatcher's salary                                $5,810

Gas and oil for delivery trucks              $2,700

Drivers' salaries                                      $16,300

Delivery equipment repairs                   <u>$310     </u>

Total                                                        <u>$44,120</u>

b)                              Period costs

Property taxes on office building    $950

CEO's salary                                      $12,100

Advertising                                        $5,500

Office supplies                                  $700

Office utilities                                     $1,100

Repairs on office equipment            <u>$210    </u>

Total                                                   <u>$20,560</u>

5 0
3 years ago
______ consists of arranging for a market offering to occupy a​ clear, distinctive, and desirable place relative to competing pr
Setler79 [48]
D. Positioning<span> consists of arranging for a market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers.</span>
7 0
3 years ago
Read 2 more answers
Other questions:
  • Why is a free rider a type of market failure?
    15·1 answer
  • Which federal government agency is the primary source for quality delivery of health services?
    6·1 answer
  • What is pure competition?
    9·2 answers
  • Sales of the cooler freeze packs made by the company Coolpaxx have been declining. Online sales information is shared with the s
    8·1 answer
  • Carla Vista Corp. has total current assets of $11,420,000, current liabilities of $4,354,000, and a quick ratio of 0.99. How muc
    13·1 answer
  • Felinas Inc. produces floor mats for cars and trucks. The owner, Kenneth Felinas, asked you to assist him in estimating his main
    12·1 answer
  • When it is reported that a nation is experiencing a "balance of payments deficit," this is best interpreted to mean that the nat
    8·2 answers
  • What is the maximum locked-rotor
    15·1 answer
  • i will give brainiest if right please answer, Parker wants to develop new food sources for less-developed countries. He was rais
    15·1 answer
  • Ework Which of the following is not a reason perfect competition is a useful simplification, despite the diversity of market typ
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!