Answer:
13.26%
Explanation:
For computing the best estimate, first we have to determine the expected rate of return by using the CAPM model which is shown below:
Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)
= 5.5% + 1.10 × 8%
= 5.5% + 8.8%
= 14.3%
The Market rate of return - Risk-free rate of return) is also known as the market risk premium and the same is applied.
Now under the dividend growth model, the cost of equity would be
Price = Next year dividend ÷ (Required rate of return - growth rate)
where,
the next year dividend would be
= $2.20 + $2.20 × 5%
= $2.20 + 0.11
= $2.31
The other items rate would remain same
Now put these values to the above formula
So, the value would equal to
$32 = $2.31 ÷ (Cost of equity - 5%)
After solving this, the cost of equity would be 12.22%
Now the best estimated would be
= (14.3% + 12.2%) ÷ 2
= 13.26%
Answer:
1. Cash payments for merchandise is $446,030
2.Cash payment for operating expense is $77,870
Explanation:
1. In order to calculate the Cash payments for Merchandise we would have to use the following formula:
Cash payments for Merchandise= cost of goods sold +decrease in accounts payable-decrease in inventory
Cash payments for Merchandise=$448,500+$4,290-$6,760
Cash payment for Merchandise=$446,030
2. In order to calculate the Cash payments for operating expenses we would have to use the following formula:
Cash payment for operating expense=operating expense - decrease in prepaid expense +decrease in Accured
Cash payment for operating expense=$78,000 -$650+$520
Cash payment for operating expense=$77,870
Answer:
$30,604
Explanation:
The computation of the interest expense for the year 2020 is as follows:
2019 interest expense is
= Equipment amount × rate of interest
= $311,967 × 9%
= $28,077
The Dec 31 2019 liability of book value is
= $311,967 + $28,077
= $340,044
Now the interest expense for the year 2020 is
= $340,044 × 0.09
= $30,604
<span>B. Debt
</span>A credit<span> risk is the risk of </span>default<span> on a </span>debt<span> that may arise from a borrower failing to </span>make<span> required payments.</span>
