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mote1985 [20]
3 years ago
6

The risk free rate of return is 2.5% and the market risk premium is 8%. Rogue Transport has a beta of 2.2 and a standard deviati

on of returns of 28%. Rogue Transport's marginal tax rate is 35%. Analysts expect Rogue Transport's dividends to grow by 6% per year for the foreseeable future. Using the capital asset pricing model, what is Rogue Transport's cost of retained earnings? Select one:
a. 17.7%
b. 20.1%
c. 16.4%
d. 19.6%
Business
1 answer:
4vir4ik [10]3 years ago
6 0

Answer:

20.1%

Explanation:

In capital asset prcing model (CAPM), cost of equity (or cost of retained earnings in this context) is calculated as below:

<em>Cost of equity = risk-free rate of return + beta x (market index return - risk-free rate of return)</em>

Please note that <em>(market index return - risk-free rate of return)</em> is equal to <em>market risk premium</em>

Putting all the number together, we have:

Cost of equity/retained earnings = 2.5% + 2.2 x 8% = 20.1%

<em>Note: The dividend growth rate, tax rate & stock standard deviation is not relevant in answering the question.</em>

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Your office network has been measured to stay working an average of 2,200 hours with a standard deviation of 285 hours. What is
JulsSmile [24]

We assume here that <em>the probability for an office network to fail</em> follows a <em>normal distribution</em> with a <em>population mean of 2,200 hours</em> and a <em>population standard deviation of 285 hours</em>.

Answer:

The probability that the network will stay up for 2,800 hours before it fails is about 1.743%.

Explanation:

According to the question that the office network "has been measured to stay working an average of 2,200 hours", we can conclude that, for <em>normally distributed data</em>, at this working time, the office network has a probability of failure of 50% and a probability of being working of 50%, too.

As the office network still operates, the probability of failure increases following a normal distribution. So, for 2,800 hours of operation, we need to calculate the probability of failure for this network.

For this, we need to determine the <em>z-score</em> for the raw value of x = 2,800 hours, to later consult a <em>standard cumulative normal table </em>and find the probability associated with this z-score. To calculate it, we can use the z-score formula:

z\;score = \frac{x - \mu}{\sigma}

Where

\\ \mu\;is\;the\;population\;mean

\\ \sigma\;is\;the\;population\;standard\;deviation

And <em>x</em> is the raw score or the 2,800 hours of operation for the office network.

Thus

z = \frac{2800 - 2200}{285}

z = 2.105 \approx 2.11

Having a z = 2.11 (approximately) and consulting a <em>standard cumulative normal table, </em>we have that<em> </em>P(z<2.11) = 0.98257.

In other words, for 2,800 hours of operation for the office network, there is a probability of about 98.257% that this network <em>has failed by this time</em>.

Therefore, the probability that the network will stay up for 2,800 hours is 1 - 0.98257 = 0.01743 or about 1.743% of being working before it fails (or for only about 1.743% of the cases, the office network stays working for 2,800 hours).

The graph below has the shaded area that represents this probability.

8 0
2 years ago
Think about the organization you currently are employed (were employed, hope to be employed or an organization you are familiar
Natasha2012 [34]

In an organization, the amount of work that must be done in the program definition phase is relative to the project that will be developed in the organization. What must be delivered at this stage are:

  • the program letter
  • Registration of Interested
  • Program management plan
  • Program kick-off
  • benefit registration
  • RAID log (risks, actions, issues and decisions)
  • Program post-definition health check

<h3>Program definition</h3>

Therefore, this is the phase of the project where there will be communication about the program and authorization for the manager to proceed, containing in its definition the objectives and vision, benefits, governance, budget and responsibilities of the project.

Find out more information about organizational project here:

brainly.com/question/25846476

8 0
2 years ago
________ tariffs are designed to raise money for the government. a. Price b. Profit c. Revenue d. Regulatory
Black_prince [1.1K]

Answer:

The correct answer is letter "C": Revenue.

Explanation:

Revenue tariffs are those imposed when a government has the intention of earning a profit from business revenues. This is done with the intention of financing the government's operations to fulfill its objectives but usually has a negative effect on the market price levels.

4 0
2 years ago
You can afford to buy the latest HDTV, which means that it _____ as demand for you.
mamaluj [8]

<u>Answer:</u>

The correct answer option is 'does not count'.

<u>Explanation:</u>

You can afford to buy the latest HDTV, which means that it does not count for you.

According to principle, demand refers to as the consumer's desire and ability to purchase a good or a service.

So for this example, if somebody can afford to buy the latest HDTV then it surely does not count as a demand for them.

8 0
2 years ago
An example of product placement is when a:
forsale [732]

Answer:

verizon phone is featured in an advertisement

7 0
2 years ago
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