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Umnica [9.8K]
3 years ago
10

Suppose that two factors have been identified for the U.S. economy: the growth rate of industrial production, IP, and the inflat

ion rate, IR. IP is expected to be 4%, and IR 3.0%. A stock with a beta of 1.1 on IP and 0.5 on IR currently is expected to provide a rate of return of 7%. If industrial production actually grows by 7%, while the inflation rate turns out to be 5.0%, what is your revised estimate of the expected rate of return on the stock
Business
1 answer:
Delicious77 [7]3 years ago
6 0

Answer:

11.3%

Explanation:

Given that,

Growth rate of industrial production, IP = 4%

Inflation rate, IR = 3.0%

Beta = 1.1 on IP

Beta = 0.5 on IR

Rate of return = 7%

Before the changes in industrial production and inflation rate:

Rate of return = α + (Beta on IP) + (Beta on IR)

7% = α + (1.1 × 4%) + (0.5 × 3%)

7% = α + 4.4% + 1.5%

7% - 4.4% - 1.5% = α

1.1% = α

With the changes:

Rate of return:

= α + (Beta on IP) + (Beta on IR)

= 1.1% + (1.1 × 7%) + (0.5 × 5%)

= 1.1% + 7.7% + 2.5%

= 11.3%

Therefore, the revised estimate of the expected rate of return on the stock is 11.3%.

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Equipment with a book value of $84,000 and an original cost of $167,000 was sold at a loss of $34,000. Paid $109,000 cash for a
adoni [48]

Answer:

$443,400

Explanation:

The computation of cash flows from investing activities is shown below:-

For computing the cash flows from investing activities we need to find out first the Sale of equipment

= $84,000 - $34,000

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Net cash paid by investing activities = Sale of equipment - Purchase of new truck + Sale of land + Sale of Long-term investments

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3 0
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The Hutch Fashions sends out its spring and summer catalog to Liz. Liz falls in love with the cute dress featured on the front c
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Cindyliz is wrong in this situation

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In the simplified model with proportional taxation introduced at the end of chapter 5, there can be two equilibria, one with a h
Radda [10]

Answer:

answer is given below

Explanation:

Equilibria with high tax rate.

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Equilibria with low tax rate:

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Expenses, such as depreciation on buildings are also known as variable expenses. t or f?
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The statement “Expenses, such as depreciation on buildings are also known as variable expenses.”, is false, due to the fact that depreciation is a fixed cost since throughout its useful life as an asset, it reoccurs in the same amount per period, and thus, depreciation cannot be considered a variable cost. Nevertheless, as with all things, there is an exception. The depreciation will be sustained in a pattern that is more consistent with a variable expense, only if a business recruits a usage-based depreciation methodology.

To add, the corporate expense that alters with the company’s production output is called the variable cost.

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3 years ago
Figure your taxable income, subtract the sum of lines 8 and 9 from line 7, and then enter that number here
Anna71 [15]

Answer:

22532

Explanation:

For this one you dont look at the w2 form. you have to look at the form you are filling out go up to question number 7 and 8 you will subtract those to answers that was filled in 34732-12200= 22532

sorry for the long explanation I was currently working on this and then I read the problem so many times but I feel slow so hope this helps

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