Answer:
the expected return on the portfolio is 14.77%
Explanation:
The computation of the expected return on the portfolio is shown below:
The expected return is
= ($1,600 ÷ $4,300) × 11% + ($2,700 ÷ $4,300) × 17%
= 14.767 %
= 14.77%
The $4,300 comes from
= $1,600 + $2,700
= $4,300
hence, the expected return on the portfolio is 14.77%
The same is considered
Answer:
b. 8.82%
Explanation:
WACC = Cost of equity x Weight of equity + Cost of Preferred Stock x Weight of Preferred Stock + Cost of Debt x Weight of Debt
Cost of Preferred Stock calculation :
Cost of Preferred Stock = Expected dividend / Market Price x 100
= $6 / $50 x 100
= 12 %
After tax cost of debt calculation :
After tax cost of debt = Interest x (1 - tax rate)
= 8 % x (1 - 0.35)
= 5.20 %
therefore,
WACC = 15% x 30 % + 12 % x 10 %+ 5.20 % x 60 %
= 8.82 %
Answer:
Please find the attached file for the complete solution:
Explanation:
Answer:
Economic recession
Explanation:
A recession occurs when an economy faces a negative real GDP for two successive quarters or more. In a business cycle, the recession would be a period that occurs between the peak and the trough.
A recession can be caused by many factors:
1. High interest rates
2. High unemployment
3. Low consumer and business confidence
It is possible to say that all factors are interconnected. For example, when interest rates are higher, it means that people will spend less on borrowed money, as now borrowing money is more costly. This in turn means that demand for products are lower, leading to lower business confidence. When sales are low, businesses may attempt to cut back on costs to ensure profits. This can take the form of laying off workers. Hence, unemployment in the economy will increase. Consumer confidence will also plummet.
Some consequences may include:
1. Fall in inflation: As aggregate demand in the economy falls, price levels will fall. Thus, reducing inflation.
2. Government deficit: the government may have to start spending more on expenditures such as unemployment benefits. On the other hand, income generated from corporate/income taxes will fall. Fall in income and rise in expenditure causes a deficit.
3. Environmental pollution is less: Due to less movement in the economy, polluting factors such as factory smoke, vehicle congestion and waste send to landfill will be much lesser. This would prove to be beneficial for the environment.
Answer:
$34,600
Explanation:
The computation of beginning retained earnings balance is seen below:
But we know that;
Ending balance of retained earnings = Beginning balance of retained earnings + Net income - Dividend paid
$51,600 = Beginning retained earnings + $21,100 - $4,100
Beginning retained earnings = $51,600 - $21,100 + $4,100
Beginning retained earnings = $34,600
