Answer:
6%
Explanation:
The computation of the margin of safety percentage is shown below;
The Contribution margin ratio is
= Contribution margin ÷Sales
= ($675,00 ÷ $270,000)
= 0.25
Now breakeven point in dollars is
= Fixed cost ÷ Contribution margin ratio
= ($63,750 ÷ 0.25)
= $255,000
We know that
Margin of safety = Total sales - Breakeven sales
= ($270,000 - $255,000)
= $15,000
Now Margin of safety % is
= MOS ÷ Total sale
= ($15,000 ÷ $270,000)
= 5.56%
= 6%
Recovery, Prosperity, Recession and Depression
Answer:
claim
/klām/
verb
state or assert that something is the case, typically without providing evidence or proof.
"he claimed that he came from a wealthy, educated family"
Similar:
assert
declare
profess
maintain
state
hold
affirm
avow
aver
protest
insist
swear
attest
argue
contend
submit
move
allege
make out
avouch
asseverate
represent
noun
1.
an assertion of the truth of something, typically one that is disputed or in doubt.
"he was dogged by the claim that he had CIA links"
Similar:
assertion
declaration
profession
affirmation
avowal
averment
protestation
representation
contention
submission
case
allegation
pretense
asseveration
2.
a demand or request for something considered one's due.
"the court had denied their claims to asylum"
Similar:
request
application
demand
petition
call
Explanation:
Answer:
a. Cost of Equity is 4.50%
b. Cost of Equity is 15.55%
Explanation:
a.
The formula for price of a stock using the constant growth model of the DDM approach is,
P0 = D0 * (1+g) / r - g
Plugging in the available values,
62 = 0.3 * (1+0.04) / (r - 0.04)
62 * (r - 0.04) = 0.312
62r - 2.48 = 0.312
62r = 0.312 + 2.48
r = 2.792 / 62
r = 0.045 or 4.5%
b.
SML (r) = rRF + β * (rM - rRF)
Plugging in the values,
r = 0.045 + 1.3 * ( 0.13 - 0.045)
r = 0.1555 or 15.55%
