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satela [25.4K]
3 years ago
9

Here are data on two companies. The T-bill rate is 4% and the market risk premium is 6%.What would be the fair return for $1 Dis

count Store according to the capital asset pricing model (CAPM)
Business
1 answer:
Lady bird [3.3K]3 years ago
8 0

Answer:

13%

Explanation:

Please find attached a table containing further information needed to answer this question

According to the capital asset price model: Expected rate of return = risk free + beta x (market rate of return - risk free rate of return)

Expected rate of return = risk free + beta x market premium

Beta measures systemic risk

The higher beta is, the higher the systemic risk and the higher the compensation demanded for by investors

4% + (1.5 x 6%) = 13%

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Indicate the effect of each transaction during the month of October 20Y8 and the balances for the accounting equation after all
Leona [35]

Answer:

For better visualization, the answer is presented in a table

\left[\begin{array}{ccccc}&Assets&=&Liabilities +&Equity\\1&45,000&=&&45,000\\2&-2,000&=&&-2,000\\Bal.&43,000&=&0&43,000\\3&5,000&=&&5,000\\Bal.&48,000&=&0&48,000\\4&&=&&\\Bal.&48,000&=&0&48,000\\5&20,000&=&20,000&\\Bal.&68,000&=&20,000&48,000\\6&-1,000&=&&-1,000\\Bal.&67,000&=&20,000&47,000\\7&8,000&=&&8,000\\Bal.&75,000&=&20,000&55,000\\8&-3,000&=&&-3,000\\Bal.&72,000&=&20,000&52,000\\9&-100&=&&-100\\Bal.&71,900&=&20,000&51,900\\\end{array}\right]

Procedure details described below:

Explanation:

<em>Opened a business bank account for Jones, Inc., with an initial deposit of $45,000 in exchange for common stock. </em>

The cash is an asset for the company And Jones Is the Owner thus, asset and equity increase by 45,000

<em>Paid rent on the office building for the month, $2,000. </em>

The rent is an expense is an incurred cost to continue the operations of the business It decreases the equity and asset (cash used to pay the rent)

<em>Received cash for fees earned of $5,000. </em>

The fees are revenue from the business operations this is a realized gain, therefore, increases equity. Also, Assets increase as cash is an asset.

<em>Purchased equipment, $7,000.</em>

There is no change in the quantities but, the composition of the asset did change. Cash decrease while equipment increase.

<em>Borrowed $20,000 by issuing a note payable. </em>

The note payable is a future obligation to pay. It is a liability for the company assumed in exchange for an asset (cash)

<em>Paid salaries for the month, $1,000. </em>

Like rent, this is an incurred cost(expense) It decreases Equity also, assets as we use cash to pay it.

<em>Received cash for fees earned of $8,000.</em>

Exactly like the previous time, a realized gain generates an increase in equity and assets.

<em>Paid dividends, $3,000.</em>

The dividends are paid to the company's owners thus, the cash leaves the company into the owner's pocket. Both, assets and equity decrease (as there are fewer assets available for the owners to take)

<em />

<em>Paid interest on the note, $100.</em>

The interest also is an incurred cost thus, like salaries and rent expense we decrease equity and assets.

3 0
2 years ago
On July 1, 2021, Tremen Corporation acquired 25% of the shares of Delany Company. Tremen paid $3,090,000 for the investment, and
ankoles [38]

Answer:

The tremen's investment in Delany company is $3,162,500

Explanation:

Tremen's investment in Delany Company account would  be as follows at year ended 31st December 2021

Initial investment value                                $3,090,000

Delany's net income               $1,300,000

Dividends paid(4*$180,000)   ($720,000)

Profits after dividends               $580,000

Tremen's share 25%*$580,000*6/12               $72,500

year end balance of Tremen's investment    $3,162,500

First of all, the total dividends is taken away from net income and a portion of the net income after dividend payment is added to Tremen's investment which reflects its percentage shareholding and the duration of investment of six months

8 0
3 years ago
Describe a time where you provided or observed high-quality customer service. In Microsoft Word, margins are adjusted using?
oee [108]

Answer:

question was confusing

Explanation:

Select Layout > Margins. Select Custom Margins. In Margins, use the Up and Down arrows to enter the values you want. Select OK when done.

8 0
2 years ago
Gross domestic product is the total market value of all final goods and services produced during a period of time.
Masteriza [31]
The answer is true hope i helped

4 0
2 years ago
A company has a maintenance contract with a fixed fee of $1,200 per month plus $75 per hour for each maintenance hour used. In a
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The answer to your question would be $2700 :)
8 0
1 year ago
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