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Nataly_w [17]
4 years ago
10

The Allegheny Valley Power Company common stock has a beta of 0.80. Assume the current risk-free rate is 6.5% and the expected r

eturn on the stock market as a whole is 16%, determine the cost of equity capital for the firm (using the CAPM).
a. 14.1%b. 7.6%c. 6.5%d. 13.0%
Business
1 answer:
Nat2105 [25]4 years ago
7 0

Answer:

correct option is a. 14.1%

Explanation:

given data

beta = 0.80

current risk-free rate = 6.5%

expected return  = 16%

solution

we get here cost of equity capital that is express as

cost of equity capital = current risk-free rate + beta ( expected return - current risk-free rate )     ...........................1

put here value ans we will get cost of equity capital  

cost of equity capital  = 6.5% + 0.8 (16% - 6.5% )

solve it we get

cost of equity capital  = 14.1%

so correct option is a. 14.1%

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Roughly what percent of japan is mountainous? select one:
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A typical way in which a common-size income statement is constructed is by dividing all expense items in an income statement by
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False

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A common size income statement is an income statement expressed in percentages. Each line item is expressed as a percentage of total revenue or total sales, not as a percentage of net income.

A common size income statement is used to analyze the relative weight of the company's accounts, e.g. gross margins, net margins, manufacturing expenses relative to total sales, etc.

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B. inspire a large number of people to help achieve organizational purposes.

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Business strategy sets the overall direction for the business; it focuses on defining how a business would achieve its goals, objectives, and mission; as well as the funds and material resources required to implement or execute the business plan.

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3 years ago
Seventy new jobs are opening up at an automobile manufacturing plant, and 1000 applicants show up for the 70 positions. To selec
777dan777 [17]

Answer:

  • <em>As explained below, given that the score of the person is among the 0.03125 fraction of the best applicants, </em><u><em>he can count on getting one of the jobs.</em></u>

<em></em>

Explanation:

The hint is to use <em>Chebyshev’s Theorem.</em>

Chebyshev’s Theorem applies to any data set, even if it is not bell-shaped.

Chebyshev’s Theorem states that at least 1−1/k² of the data lie within k standard deviations of the mean.

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The number of standard deviations that 84 is from the mean is:

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Thus, the score of the person is 4 standard deviations above the mean.

How good is that?

Chebyshev’s Theorem states that at least 1−1/k² of the data lie within k standard deviations of the mean. For k = 4, that is:

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  • That means that half of 1 - 0.9375 are above k = 4: 0.03125

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Since there are 70 positions and 1,000 aplicants, 70/1,000 = 0.07. The compnay should select the best 0.07 of the applicants.

Given that the score of the person is among the 0.03125 upper fraction of the applicants, this person can count of geting one of the jobs.

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