The cost of equity is 10.6%.
<h3>What is the explanation?</h3>
The calculation of the question is shown as follows:
Cost of equity = Risk - free rate + (beta*market risk premium)
Cost of equity = 3.25% + (1.4* 5.25%)
Which is equal to 3.25% + (7.35%)
hence cost of equity is 10.6%.
<h3>
What are retained earnings?</h3>
Retained earnings refer to the total amount of earnings that a company generates from its operations. This subtracts the dividends shared among stockholders. The retained earnings are then reinvested in business.
To know more about retained earnings, visit:
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The complete question is:
Scanlon Inc.'s CFO hired you as a consultant to help her estimate the cost of capital. You have been provided with the following data: r_RF = 3.25%; R_PM = 5.25%; and b = 1.40.
Based on the CAPM approach, what is the cost of equity from retained earnings?
Answer:
The <u>c</u><u>reative strategy</u><u> </u> is the document that serves as the creative team's guide for writing and producing the ad.
Answer:
The correct answer is B. Agreements.
Explanation:
Agreement is, in Law, the decision taken jointly by two or more persons, or by a board, assembly or court. It is also called a pact, treaty, agreement, convention or resolution taken within an institution (any type of organization or company, public or private, national and international).
It is, therefore, the manifestation of a convergence of wills (decision by consensus) in order to produce legal effects. The main legal effect of the agreement is its obligation for the parties that grant it (Pacta sunt servanda) being born for the same obligations and rights (bilateral or synalagmatic contract), all to the extent provided by applicable law.
The legal validity of an agreement requires that the consent of the grantors is valid and its purpose is true and determined, not out of trade or impossible. Regarding the form of its celebration, oral or written, laws usually require certain formalities that depend on the nature of the obligations agreed upon.
Answer:
historic cost.
Explanation:
As the original cost is below the net realizable value minus normal profit margin the lower between the cost and market value therefore lower than replacement cost too. Hence, we should do no adjustment and keep the inventory valued at historic cost.
Answer:
Originally pay for the stock = $8
Explanation:
Given:
Total return = 62.5%
Value of stock (after 1 year) = $12
Dividend during the year = $1
Originally pay for the stock = ?
Computation:
![Total\ return = [\frac{Dividend + (Value\ of\ stock\ after\ 1\ year - Purchase\ Value)}{Purchase\ Value} ]\times 100](https://tex.z-dn.net/?f=Total%5C%20return%20%3D%20%5B%5Cfrac%7BDividend%20%2B%20%28Value%5C%20of%5C%20stock%5C%20after%5C%201%5C%20year%20-%20Purchase%5C%20Value%29%7D%7BPurchase%5C%20Value%7D%20%5D%5Ctimes%20100)
![62.5 = [\frac{1 + (12 - Purchase\ Value)}{Purchase\ Value} ]\times 100\\\\0.625 Purchase\ Value = 1 + 12 - Purchase\ Value\\\\1.625 Purchase\ Value = 13\\\\Purchase\ Value = 8](https://tex.z-dn.net/?f=62.5%20%3D%20%5B%5Cfrac%7B1%20%2B%20%2812%20-%20Purchase%5C%20Value%29%7D%7BPurchase%5C%20Value%7D%20%5D%5Ctimes%20100%5C%5C%5C%5C0.625%20Purchase%5C%20Value%20%3D%201%20%2B%2012%20-%20Purchase%5C%20Value%5C%5C%5C%5C1.625%20Purchase%5C%20Value%20%3D%2013%5C%5C%5C%5CPurchase%5C%20Value%20%3D%208)
Originally pay for the stock = $8
