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jenyasd209 [6]
3 years ago
7

"Given the following information from Cullumber Corporation, what price would the CAPM predict that the company’s stock will tra

de for one year from today? (Do not round intermediate calculations. Round final answer to 2 decimal places, e.g. 50.75.) Risk free rate: 3.6 % Market risk premium: 8.6 % Beta: 0.65 Current stock price: $64.60 Annual dividend: $1.84"
Business
1 answer:
Natasha_Volkova [10]3 years ago
5 0

Answer:

$68.70

Explanation:

Risk free rate: 3.6 %

Market risk premium: 8.6 %

Beta: 0.65

Current stock price: $64.60

Annual dividend: $1.84

The expected rate of return = 3.6% + 0.65*8.6%

The expected rate of return = 0.036 + 0.0559

The expected rate of return =  0.0919

The expected rate of return = 9.19%

Required return = (P1-P0+Dividends)/P0

9.19% =  [(Price + 1.84)/64.60 ] - 1

9.19% + 1 = (Price + 1.84)/64.60

64.60*(0.0919 + 1) = Price + 1.84

70.53674 = Price + 1.84

Price = 70.53674 - 1.84

Price = $68.69674

Price = $68.70

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Sanborn Industries has the following overhead costs and cost drivers. Direct labor hours are estimated at 100,000 for the year.
Nana76 [90]

Answer:

d) 34.17

Explanation:

we must first calculate the total overhead expenses = $120,000 (ordering and receiving) + $297,000 (machine setup) + $1,500,000 (machining) + $1,200,000 (assembly parts) + $300,000 (inspection) = $3,417,000

since overhead is applied based on direct labor hours, then the predetermined overhead rate = total overhead expenses / total direct labor hours = $3,417,000 / 100,000 labor hours = $34.17 per labor hour

8 0
3 years ago
The average annual return over the period 1926-2009 for the S&P 500 is 12.0%, and the standard
arsen [322]

Answer:

C) -30.6%, 54.6%

Explanation:

95% Confidence Interval = (Average Return - 2*Standard Deviation, Average Return + 2*Standard Deviation)

=(0.12 - 2*0.213, 0.12 + 2*0.213)

= -30.6%,54.6%

Therefore, The 95% confidence interval for  2010 returns is -30.6%,54.6%.

5 0
3 years ago
In 1998 the foreign trade term most favored nation was changed to what
aliina [53]
In 1998 the foreign trade term most favored nation changed into normal trade relation. Most favored nation is a term given by a country to another country. This term show that country interested to increase the trade between them. A country with this term will get some benefit from the giving country because the giving country may reduce their protection in trade to the country with the most favored nation term<span>.</span>
7 0
3 years ago
You recently purchased a stock that is expected to earn 12% in a booming economy, 8% in a normal economy and lose 5% in a recess
Papessa [141]

Answer:

The expected return on this stock is 7.3%

Explanation:

Using the expectations model, we can calculate the expected return on the stock based on the return on stock in different scenarios/states and the probability of those states.

The expected return on the stock is,

Expected r = rA * pA  +  rB * pB  + rC * pC

Where,

  • r represents the returns in each state
  • p represents the probability of each state

Expected r = 0.12  * 0.15  +  0.08 * 0.75  +  (-0.05 * 0.1)

Expected r = 0.073 or 7.3%

3 0
3 years ago
The distribution of 27 salaries at a small company has mean $35,000 and standard deviation $2,000. Suppose the company hires a 2
bonufazy [111]

Answer:

Correct option is (c)

Explanation:

Mean is the average of values in a data set. Range is the difference between highest and lowest values in the data set and median is the mid point (value) that separates lower and higher values in a data set.

If a data point is added, in this case 28th employee is added, definitely mean will change. If data point higher than existing mean is added,  then mean will increase. Median and range may or may not change depending on the value added or removed.

In this case, mean is likely to increase since 28th employee's salary is more than existing mean.

7 0
3 years ago
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