Businesses/producers make the goods and services that exist in the economy. Producers create goods or services that are available for consumers to purchase so that they are making a profit. Consumers need to be interested in the goods or services available so that the companies stay in business and help drive the economy.
Answer:
The cost of equity capital or expected rate of return is 7.22%
Explanation:
The expected rate of return or the required rate of return is the minimum rate of return required by the investors to invest in a stock or a portfolio of stock based on the systematic risk that a stock carries as represented by a stock's beta. The expected rate of return (r) of a stock can be calculated using the CAPM equation.
The CAPM equation is,
r = rRF + Beta * rpM
Where,
- rRF is the risk free rate
- rpM is the risk premium on market
r = 0.041 + 0.6 * 0.052
r = 0.0722 or 7.22%
Answer:
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Explanation:
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Answer:
10 years
Explanation:
A = P(1 + r)^n
A (amount) = $10,000
P (principal) = $4,500
r = 8.25% = 0.0825
10,000 = 4,500(1 + 0.0825)^n
10,000/4,500 = 1.0825^n
2.22 = 1.0825^n
Log 2.22 = Log1.0825^n
nLog1.0825 = Log2.22
n = Log2.22/Log1.0825 = 0.3464/0.034 = 10 years (to the nearest year)
