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xz_007 [3.2K]
3 years ago
6

A stock with a beta of 1.2 has an expected rate of return of 16%. If the market return this year turns out to be 10 percentage p

oints below expectations, what is your best guess as to the rate of return on the stock?
Business
1 answer:
KiRa [710]3 years ago
7 0

Answer:

rate of return on the stock is 4%

Explanation:

given data

stock beta = 1.2

expected rate of return = 16%

market return = 10%

to find out

rate of return on the stock

solution

we get here rate of return on the stock hat is express as

rate of return on the stock = expected rate of return - ( stock beta × market return )   ...........................1

put here value we get

rate of return on the stock = 16 % - ( 1.2 × 10% )

rate of return on the stock = 0.16 - ( 1.2 × 0.10 )

rate of return on the stock = 0.16 - 0.12

rate of return on the stock = 0.04

rate of return on the stock is 4%

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If the factory overhead is underapplied, then the adjusting journal entry to close the factory overhead account includes a: (Che
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Answer:

Debit to cost of goods sold and credit to factory overhead

Explanation:

Here we are interested in knowing the appropriate journal entry when the factory overhead is under applied.

What happens to the factory overhead journal in this case is that the we should have an adjusting journal entry.

The adjusting journal entry here is that we debit cost of goods sold and credit factory overhead

5 0
2 years ago
The Josey Company purchased equipment for $21,000 on October 1. It is estimated that annual depreciation on the computer will be
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3 years ago
Which of the following is not a form of business combination?: (A) Acquisition. (B) S Corporation. (C) Conglomerate. (D) Merger.
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Answer:

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8 0
3 years ago
Graham Freightway provides freight service. The company's balance sheet includes Land, Buildings, and Motor-Carrier Equipment. G
PIT_PIT [208]

Answer:

Graham Freightway

Journal Entries:

Jan. 1:

Debit New Motor-carrier Equipment $236,000

Debit Accumulated Depreciation $92,000

Credit Old Motor-carrier Equipment $131,000

Credit Cash Account $173,000

Credit Gain on Equipment Disposal $24,000

To record the trade-in of old equipment for a new one.

July 1:

Debit Cash Account $90,000

Debit Note Receivable $590,000

Debit Accumulated Depreciation 286,750

Credit Building $580,000

Credit Gain on Building Disposal $386,750

To record the sale of building.

Oct. 31:

Debit Land $204,000

Debit Building $396,000

Credit Cash Account $600,000

To record the purchase of land and building for cash.

Dec. 31:

Depreciation Expense on New Motor-carrier Equipment $34,080

Credit Accumulated Depreciation on Equipment $34,080

To record the depreciation expense for the year.

Dec. 31:

Depreciation Expense on Building $2,225

Credit Accumulated Depreciation on Building $2,225

To record the depreciation expense for the 3 months.

Explanation:

a) Data and Calculations:

1. Gain on Equipment of $24,000 is based on the difference between the net book value of the equipment and the trade-in cost.

2. The same is also applicable on the Building.

3. Allocation of the purchased cost of $600,000:

Land = 234,600/690,000 * $600,000 = $204,000

Building = 455,600/690,000 * $600,000 = $396,000

4. Depreciation on New Motor-carrier equipment:

Depreciable amount = $213,000 ($236,000 - 23,000)

Useful life = 1 million miles

Estimated residual value = $23,000

Depreciation rate = $213,000/ 1 million = $0.213

1st year depreciation = $0.213 * 160,000 = $34,080

5. Depreciation on Building:

Depreciable amount = $356,000 ($396,000 - 40,000)

Useful life = 40 years

Estimated residual value = $40,000

Depreciation rate = $8,900 ($356,000/40)

For three months, depreciation expense = $8,900/12 * 3 = $2,225

4 0
2 years ago
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