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Ira Lisetskai [31]
2 years ago
14

Stock in CDB Industries has a beta of 1.10. The market risk premium is 7 percent, and T-bills are currently yielding 4 percent.

The most recent dividend was $3.40 per share, and dividends are expected to grow at an annual rate of 5 percent indefinitely. The stock sells for $56 per share. Using the CAPM, what is your estimate of the company's cost of equity
Business
1 answer:
12345 [234]2 years ago
3 0

Answer:

Cost of equity = 11.7%

Explanation:

<em>The capital asset pricing model is a risk-based model. Here, the return on equity is dependent on the level of reaction of the the equity to changes in the return on a market portfolio. These changes are captured as systematic risk. The magnitude by which a stock is affected by systematic risk is measured by beta.</em>

Under CAPM, Ke= Rf + β(Rm-Rf)  

Rf-risk-free rate,-4%,  β= Beta-1.10, (Rm-Rf) = 7% ,Ke = cost of equity

Using this model,  

Ke=4% + 1.10×7%

= 11.7 %

Cost of equity = 11.7%

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Assume France and Mali can both produce grain and dates, and that the only limited resource is the farming labor force, meaning
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Answer:

In France:

Farmer can produce = 10 metric tons of grain or 5 metric tons of dates in a season

In Mali:

Farmer can produce = 10 metric tons of grain or 25 metric tons of dates.

(1) Mali has the absolute advantage in producing dates because Mali produces more metric tons of dates than France from the same level resources.

(2) No country has an absolute advantage in producing grain because same amount of grain were produced by both the countries with the same level of resources.

(3) Opportunity cost of dates in France = \frac{10}{5}

                                                                 = 2 grain

Opportunity cost of dates in Mali = \frac{10}{25}

                                                       = 0.4 grain  

Therefore, Mali's opportunity cost of producing dates is lower than France, so Mali has a comparative advantage in producing dates.

(4) Opportunity cost of grain in France =  \frac{5}{10}

                                                                = 0.5 dates

Opportunity cost of grain in Mali = \frac{25}{10}

                                                      = 2.5 dates

Therefore, France's opportunity cost of producing grains is lower than Mali, so France has a comparative advantage in producing grains.                                          

7 0
3 years ago
About what is in your proposed product or service that will satisfy the need of your community.​
kobusy [5.1K]

Explanation:

For a product or service to satisfy the needs of its potential audience or a community, it is necessary that it adds value to these people, that is, that the marketing objectives related to the product or service are aligned with the wishes, preferences and expectations of the customers. consumers, so that it adds value and raises the need for consumption. It is necessary for a company to study the market before inserting a new product, in order to identify the consumption profile of a certain group of consumers and for the strategic planning to be well aligned with actions to achieve the marketing objectives.

4 0
2 years ago
Marigold Corp. reported the following year-end information: beginning work in process inventory, $90000; cost of goods manufactu
Stels [109]

Answer:

=$854,000

Explanation:

The cost of goods sold is the expense incurred by a manufacturing firm when making goods to be sold to customers. It is calculated using the formula.

Cost of goods sold = Beginning Stock plus purchases/ cost of goods manufactured minus  ending stock

Marigold Corp:

Beginning stock: $162,000

Ending stock: $174,000

cost of goods manufactured, $866000;

cost of goods sold =

$162,000 + 866,000 -$174,000

=$854,000

7 0
3 years ago
Business incubators are a time honored tradition and have been around since the early 1700s. True or false?
Shkiper50 [21]
<span>Business incubators are a time honored tradition and have been around since the early 1700s.
</span>
Ans: its true 
3 0
3 years ago
what is the present value of $500 recieved at the end of each year for 15 years? ( assume thatt the first patyment is recieved a
Eva8 [605]

Answer:

$3800

Explanation:

Present value is the sum of discounted cash flows

Present value can be calculated using a financial calculator

Cash flow fromyear 1 to 15 = 500

I = 10%

PV = 3800

To find the PV using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.  

4 0
2 years ago
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