Spreadsheet software can be used to do all the following except

Gwen's decision to buy a new television instead of a bicycle for the same price a. means that opportunity cost is zero since bot

Mandarinka [93]

Answer:

A.

Explanation:

6 0

3 years ago

Trendsetters has a cost of equity of 14.6 percent. the market risk premium is 8.4 percent and the risk-free rate is 3.9 percent.

BabaBlast [244]

Given:
cost of equity of 14.6 percent
market risk premium is 8.4 percent
risk-free rate is 3.9 percent
increase company's beta to 1.4 after purchase.

We will use the CAPM or Capital Asset Pricing Model formula to solve the new cost of equity.

Re = rf + (rm – rf) * β

Where:

Re = the required rate of return on equity
rf = the risk free rate
rm – rf = the market risk premium
β = beta coefficient = unsystematic risk

We need to solve for the original beta coefficient using the given cost of equity, market risk premium and risk free rate.

Re = rf + (rm – rf) * β
14.6% = 3.9% + 8.4% * β
14.6% - 3.9% = 8.4% * β
10.7% / 8.4% = β
1.27 = β

The initial beta coefficient is 1.27.

Using the same risk free rate, market risk premium, and a new beta coefficient of 1.4, we need to solve the cost of equity.

Re = 3.9% + 8.4% * 1.4
Re = 3.9% + 11.76%
Re = 15.66%

The new cost of equity after purchasing a company is 15.66%. It increase from 14.6% by 1.06%.

4 0

3 years ago

(I) Because interest rates on Treasury bills are more volatile than rates on long-term securities, the return on short-term Trea

kherson [118]

Answer:

B) (I) is false, (II) true.

Explanation:

Even though short term rates (Treasury bills) are much more volatile than long term rates (Treasury bonds), it is normal that the rate of return on Treasury bills is lower than the rate of return on Treasury bonds. Some of the reasons why Treasury bills have such a low rate of return is that they are very liquid investments and they don't pay any periodic interest.

7 0

3 years ago

Schell Company manufactures automobile floor mats. It currently has two product lines, the Standard and the Deluxe. Schell has a

ziro4ka [17]

Answer:

Schell Company

Overhead assigned: Standard Deluxe

a. Based on Labor hours $16,280 $9,460

b. Based on Machine hours $10,663 $15,076

Explanation:

a) Data and Calculations:

Total overhead = $25,740

Total Standard Deluxe Overhead Rate

Labor hours 1,170 740 430 $22 ($25,740/1,170)

Machine hours 7,000 2,900 4,100 $3.677 ($25,740/7,000)

Overhead assigned: Standard Deluxe

a. Based on Labor hours $16,280 $9,460

($22 * 740) ($22 * 430)

b. Based on Machine hours $10,663 $15,076

($3.677 * 2,900) ($3.677 * 4,100)

4 0

3 years ago

Refer to the scenario below to answer the following question(s).Bryant and Anne are the owners of the Good Green Grocer, a small

nasty-shy [4]

Answer: deceptive pricing

Explanation:

Overall, the answer could be deduced from the defenitions of those terms.

We can surely exclude green washing, which basically means that the product is sold under "eco", "green" label, when it is not. Puffery is a legal practise, which can not be proven to be true or false; which is clearly not the case in this example.

Now we are left with three categories of deceptive marketing practices. Deceptive packaging means that the product does not fit the image peceived from its package. This might be the design, the size, the picture of the product, etc. Deceptive promotion means that the information on the ads is inaccurate, partly withhold, or false. Deceptive pricing means that the seller offers the product at lower price. This can be done by promoting low price for low-in-stock or out-of stock items and then offering the substituent products of the same category, which are surely more expensive.

7 0

3 years ago