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ddd [48]
2 years ago
12

I am buying a firm with an expected perpetual cash flow of $1,000 but am unsure of its risk. If I think the beta of the firm is

0, when the beta is really 1, how much more will I offer for the firm than it is truly worth? Assume the risk-free rate is 4% and the expected rate of return on the market is 10%. (Input the amount as a positive value.)
Business
1 answer:
Nitella [24]2 years ago
8 0

Answer:

$15,000

Explanation:

Value of a perpetuality = cash flow / r

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

4 + 0 (10 - 4) = 4

1,000/ 0.04 = 25,000

4 + 1 (10 - 4) = 10

1000 / 0.1 = 10,000

25,000 - 10,000 = 15,000

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olga55 [171]

Answer: The answer is b. The benefit of the music to Ty must exceed the cost of the noise to Olivia.

Explanation: According to the Coase Theorem, as long as Ty values his stereo system Olivia will still not get the benefit of the doubt to get her sleep. So Ty has to pay her enough that it would benefit himself and his neighbor Olivia.

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4 0
2 years ago
Nielson Corp. sells its product for $6,600 per unit. Variable costs per unit are: manufacturing, $3,600, and selling and adminis
Anvisha [2.4K]

Answer:

B) $8,400

Explanation:

Absorption costing consider all the cost incurred in production either variable or fixed as production cost.

As we know variable cost vary with the change in the sale but the fixed costs remains constant whatever the level of sale is.

As per given data

Selling price = $6,600

Variable manufacturing cost = $3,600

Manufacturing Fixed Cost = $18,000

Total cost per unit = $3,600 + $18,000/20 = $4,500

Sales = Selling price x Numbers of units sold = $6,600 x 16 = $105,600

Cost of goods sold = Units sold x Cost per unit = 16 units x $4,500 = $72,000

Gross income = Sales - Cost of Goods sold = $105,600 - $72,000 = $33,600

Selling and Admin Cost = Variable cost + Fixed = (16 x $75) + $24,000 = $25,200

Net Income = Gross Income - Selling and Admin cost = $33,600 - $25,200 = $8,400

6 0
3 years ago
What is a face to face channel
Harrizon [31]
Face to face channel is a concept in sociology, linguistic, media and communication studies describing social interaction carried out without any mediating technology. The is what the word means
4 0
2 years ago
The knowledge and skills acquired by a worker through education and experience is a description of which factor of production? p
Marta_Voda [28]

Answer:

human

Explanation:

I took the test

6 0
2 years ago
Sun Inc. assigns $6,000,000 of its accounts receivables as collateral for a $2 million 8% loan with a bank. Sun Inc. also pays a
meriva

Answer:

The answer is: Assigning accounts receivables as collateral for a bank is not a asset transfer.

Explanation:

Even as the bank offers Sun Inc. with a factoring limit, the accounts receivables are still in the firm's accounting book. The firm has the obligations to go after their debtors for collections. The account receivables are transferred to creditors when a company becomes defaulted or bankrupted.

7 0
2 years ago
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