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Montano1993 [528]
3 years ago
13

Butcher Timber Company hired your consulting firm to help them estimate the cost of equity. The yield on the firm's bonds is 10.

50%, and your firm's economists believe that the cost of equity can be estimated using a risk premium of 3.85% over a firm's own cost of debt. What is an estimate of the firm's cost of equity from retained earnings?
Business
1 answer:
Gala2k [10]3 years ago
3 0

Answer:

Cost of Equity will be= 14.35%

Explanation:

Cost of equity can be calculated as Risk free return+[beta*Risk Premium]

IN given case Risk free return will be yield on bond=10.05%

Risk Premium given=3.85%

But beta of company is not given, and market beta also not given, hence we can not calculate beta.

we can assume beta of company is 1, then-

Cost of Equity will be= 10.50%+3.85%= 14.35%

Note- Retained earning also not given so that we calculate based of retain earning.

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Answer:

d. both countries, as whole, will be better off.

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When countries leverage on their comparative advantages, they will be better off. In this instance as US has comparative advantage in producing airplanes, it will be more cost effective for them to produce and export to Japan.

So also Japan will find it cheaper to produce televisions and export to the US. Both contries reduce cost by producing goods they have comparative advantage in.

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Elastic demand means that consumers are sensitive to price and that increased prices can lead to lower sales. There isn't enough information to fully answer this question. We don't know how elastic the demand is. If the demand is only slightly elastic, the increased price and lower demand could still equal higher profits.

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3 years ago
On September 1, 2021, Hiker Shoes issued a $106,000, 6-month, noninterest-bearing note. The loan was made by Second Commercial B
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Answer:

Explanation:

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= 0.1164 * 100

= 11.64%

1.

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8 0
3 years ago
Vandelay Industries' VP of support wants an automated way to notify the support team when an unresolved case has been open for o
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Answer:

Escalation rules

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2 years ago
You purchased a stock for $29.40 a share, received a dividend of $0.72 per share, and sold the stock after one year for $31.30 a
Ludmilka [50]

Answer:

2.45%

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