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3 years ago

8

A company is 40% financed by risk-free debt. the interest rate is 10%, the expected market risk premium is 8%, and the beta of t

he company’s common stock is .5.

1 answer:

Evgen [1.6K]3 years ago

6 0

What is the question? i need more details to helpp you properly

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Both Bond Sam and Bond Dave have 7.3 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has three

Ainat [17]

Answer:

-5.14 for sam

-18.01% for dave

Explanation:

We first calculate for Sam

R = 7.3%

We have 2% increase

= 9.3%

We calculate for present value of coupon and present value at maturity using the formula for present value in the attachment

To get C

1000 x 0.073/2

= 36.5

time= 3 years x 2 times payment = 6

Ytm = rate = 9.3%/2 = 0.0465

Putting values into the formula

36.5[1-(1+0.0465)^-6/0.0465]

= 36.5(1-0.7613/0.0465)

36.5(0.2385/0.0465)

= 36.5 x 5.129

Present value of coupon = 187.20

We solve for maturity

M = 1000

T = 6 months

R = 0.0465

1000/(1+0.0465)⁶

= 1000/1.3135

Present value = 761.32

We add up the value of present value at maturity and that at coupon

761.32 + 187.20

= $948.52

Change in % = 948.52/1000 - 1

= -0.05148

= -5.14 for sam

We calculate for Dave

He has 20 years and payment is two times yearly

= 20x2 = 40

36.5 [1-(1+0.0465)^-40/0.0465]

Present value = 36.5 x 18.014

= 657.511

At maturity,

Present value = 1000/(1+0.0465)⁴⁰

= 1000/6.1598

= 162.34

We add up these present values

= 657.511+162.34 = $819.851

Change = 819.851/1000 -1

= -0.1801

= -18.01%

4 0

3 years ago

Star Corp., a publicly traded, accrual-method C corp., incurred the following expenses in 2020 (all of which are ordinary and ne

Shtirlitz [24]

Answer:

Star Corp.

Star Corp.'s total deductible business expenses for the year is:

= $1,952,000.

Explanation:

Ordinary and Necessary Expenses incurred in 2020:

Office rent: $50,000

CEO compensation: $1,500,000

Salary paid to janitor: $250,000

Business meals: $30,000 (100% of the amount paid)

Client entertainment: $100,000 (100% of the amount paid)

Political contribution/lobbying: $5,000

Advertising: $70,000

Taxes & licenses (state, local &

payroll tax; not fed. inc. tax): $30,000

Life insurance policy on CEO

- premiums: $12,000

Federal income taxes: $250,000

Total expenses incurred $2,297,000

Total Deductible Business Expenses for the year:

Office rent: $50,000

CEO compensation: $1,500,000

Salary paid to janitor: $20,000

Business meals: $15,000 (50% of $30,000)

Client entertainment: $0 (0% of $100,000)

Political contribution/lobbying: $5,000

Advertising: $70,000

Taxes & licenses (state, local &

payroll tax; not fed. inc. tax): $30,000

Life insurance policy on CEO

- premiums: $12,000

Federal income taxes: $250,000

Total deductible expense = $1,952,000

5 0

3 years ago

Country a is characterized by tightly knit social groups and it places importance on belonging to organizations, families, and

eduard

<span>Country is characterized by tightly knit social groups and it places importance on belonging to organizations, families, and other groups, it has collectivism.
</span>In cultures in which collectivism predominates, group decisions are valued and accepted.
<span>In individualism on the other hand, the primary concern is for themselves and their families.</span>

4 0

3 years ago

In a retail cash sales environment, which of the following controls is often absent?

JulijaS [17]

Answer:

The correct answer to the following question is option b) Separation of functions.

Explanation:

In a retail environment , the cash management process starts when a customer pays the cashier for the product or services he or she has purchased. The cashier then counts the cash in till drawer and then at end of the day cashier takes that cash to the third party who can be either manager or owner or a supervisor. Then cashier would receive a receipt against the cash for till drawer.

Now supervisor would collect cash from all the cashier and prepare the cash to be deposited in bank. So from this process it is quite clear that here there is separation of functions here and while all other options given in the question are present in the process.

6 0

3 years ago

Quest Outdoor Store orders River Run-brand kayaks from Sports Merchandise, Inc. Sports Merchandise ships kayaks of the wrong siz

Sidana [21]

Answer:

Sports Merchandise

Explanation:

According to the situation that has been described in the question it can be said that the loss is suffered by Sports Merchandise. This is because a the seller of a good or product is liable for that product until the buyer purchases the product and decides to keep it. Which in this scenario since Sports Merchandise made a mistake on the product size and Quest decided not to accept the product then the responsibility and risk of loss remained with Sports Merchandise as the owner of the product.

5 0

3 years ago