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Over [174]
3 years ago
10

Calculate the required rate of return for Mercury Inc., assuming that investors expect a 5% rate of inflation in the future. The

real risk-free rate is 3% and the market risk premium is 5%. Mercury has a beta of 2.0, and its realized rate of return has averaged 15% over the last 5 years. a. 20% b. 17% c. 18% d. 16% e. 15%
Business
1 answer:
My name is Ann [436]3 years ago
8 0

Answer:

Option C is correct.

<u>The required rate of return for Mercury Inc., assuming that investors expect a 5% rate of inflation in the future is 18%.</u>

Explanation:

Real risk free rate = 3%

Inflation Premium = 5%

Nominal risk free rate Rf = Real risk free rate + Inflation Premium = 3% + 5% = 8%

Market risk premium (Rm –Rf) = 5%

Beta = 2

As per CAPM, required rate of return = Rf + beta * (Rm – Rf) = 8% + 2 * 5% = 18%

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Answer:

Note: Missing question but the full question is attached as picture below

The Cash dividends paid to common stockholders can be obtained the financing activities section of the Consolidated statement of cash flows tagged (Payments of dividends and dividends equivalents)

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On July 1 the Fisher Shoe Store paid $24,000 to Acme Realty for 6 months rent beginning July 1. Prepaid Rent was increased for t
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Answer:

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Answer:

E) I, II, and III.

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