Answer:
the discount rate should be 10%
Explanation:
The computation of the discount rate should be given below:
The Amount of discount is is
= $50,000 - $48,750
= $ 1,250
The $1,250 should be for 90 days.
So for 360 days, it should be
= $1,250 × 4
= $5,000.
And, the discount rate is
= $5,000 ÷ 50,000 × 100
= 10%
Hence, the discount rate should be 10%
Answer:
The stock's new expected rate of return is 14%
Explanation:
Ke=Rf+beta(Mrp-Rf)
Ke is the cost of capital is 10.20%
Rf i the risk free rate which is unknown
beta is 1.00
(Mrp-Rf) is the market risk premium at 6%
10.20%=Rf+1.0(6%)
10.20%=Rf+6.0%
Rf=10.20-6.00%
Rf=4.20%
Beta for the risky asset is 1.00*130%=1.3
New risk rate is the old rate plus inflation rate of 2.00%
new risk free=4.2%+2%=6.2%
The expected return on the new asset is computed thus:
Ke=6.2%+1.3(6%)
Ke=6.2%+7.8%
Ke=14%
Answer:
Income Statement Dec. 31, 20Y6
<u> Glacier Travel Service </u>
Total revenue $900,000
- Wages expense ($425,000)
- Rent expense ($180,000)
- Utilities expense ($75,000)
- Supplies expense ($38,000
)
<u>- Miscellaneous expense ($37,000)
</u>
EBIT $145,000
<u>- Taxes ($30,000)</u>
Net profit $115,000
The where’s the picture !!
