Answer:
The right solution is Option a (-$6,678).
Explanation:
Given that:
Up-front cost,
= $250,000
Expected cash flows,
= $110,000
Assuming cost of capital,
= 12%
Now,
The expected net present value will be:
= 
= 
= 
($)
Answer:
The answer is A) Puts emphasis on the external environment, which plays a role in determining a company´s ability to achieve above-average returns.
Explanation:
The I/O Model of Above-Average Returns basically assumes that the industry in which a company decides to compete in has a much larger influence on performance (earnings and profit) than the choices the managers of this company make.
The basic assumptions of this organization model are:
- The external environment imposes pressures and constraints that determine the strategies of the company and will result in above average returns.
- It assumes competing companies control similar strategically relevant resources and pursue similar strategies.
- Resources are highly mobile across companies, so that any differences that might develop between companies will be short-lived.
- Decision-makers within the company are assumed to be rational and committed to acting in the company´s profit-maximizing behaviors.
Answer: 7.46%
Explanation:
The CAPITAL ASSET PRICING MODEL is a very useful tool for calculating a firm's Cost of Equity.
The Formula is,
Rc = Rrf + b(Rpm)
Where,
Rc is the Cost of Equity
Rpf is the Risk risk free rate
b is beta
Rpm is the risk premium
Plugging in the digits we have,
Rc = 0.0350 + 0.88(0.045)
= 0.0746
The firm's cost of equity from retained earnings based on the CAPM is therefore 7.46%
A. I went to fourth grade however, that was a long time ago
