The correct answer for the question that is being presented above is this one: "C. commercial image." A mission statement that concentrates on how your 4 will affect your competitors, rather than focusing on your goals is called a/an commercial image statement.
Answer:
c) $110,000
Explanation:
The computation of the borrowing amount is shown below:
= Value of home × given percentage - current mortgage amount
= $200,000 × 80% - $50,000
= $160,000 - $50,000
= $110,000
For computing the accurate value, we have to deduct the current mortgage amount from the net value of home.
Since only 80% is related to the home value so we take only 80% and rest 20% would be ignored.
The real interest rate is simply nominal interest rate
less the inflation rate. In equation form this is equivalent to:
Real interest rate = Nominal rate – Inflation Rate
Real interest rate = 9% - 4%
Real interest rate = 5%
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Answer:
3.5%
Explanation:
We will apply asset pricing model to calculate cost of equity (required rate of return). The capital asset pricing model is stated as below:
Cost of equity = Risk-free rate + Beta x Market risk premium
Putting all the number together, we have:
Cost of equity (Beale) = 5.5% + 1.8 x (9% - 5.5%) = 11.8%
Cost of equity (Foley) = 5.5% + 0.8 x (9% - 5.5%) = 8.3%
Cost of equity (Beale) - Cost of equity (Foley) = 11.8% - 8.3% = 3.5%
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<em>Note: You can also do quick calculation as below:</em>
<em>Cost of equity (Beale) - Cost of equity (Foley) = (Beta of Beale - Bete of Foley) x Market risk premium = (1.8 - 0.8) x (9% - 5.5%) = 3.5%</em>
