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Strike441 [17]
3 years ago
15

Commercial Construction Builders has a beta of 1.34, a dividend growth rate of 2.1 percent for the foreseeable future, a stock p

rice of $15 per share, and an expected annual dividend of $0.45 per share next year. The market rate of return is 12.8 percent and the risk-free rate is 4.2 percent. What is the firm's average cost of equity?​
Business
1 answer:
Effectus [21]3 years ago
7 0

Answer:

10.412%

Explanation:

The computation of the average cost of equity of the firm is shown below;

The Cost of equity as per CAPM is

= risk free rate + beta × (market rate - risk free rate)

= 4.2 + 1.34 × (12.8 - 4.2)

= 15.724%

Now the Cost of equity as per growth model is

= (D1 ÷ Current price) +Growth rate

= [0.45 ÷ 15] + 0.021

= 5.1%

Now the Average Cost of equity is

= (15.724 + 5.1) ÷ 2 2

= 10.412%

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QUESTION ONE (1)
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Y’all really be posting the whole passage on here, at this point y’all are just lazy to actually work it out
3 0
3 years ago
An investor purchased 100 shares of stock X at \small 6\frac{1}{8} dollars per share and sold them all a year later at 24 dollar
Salsk061 [2.6K]

Answer:

option (C) 280%

Explanation:

Number of shares of stock X purchased = 100

Purchasing cost of share = \$6\frac{1}{8} =\frac{49}{8}

Selling cost of stocks = $24 per share

Brokerage paid = 2%

Now,

The total purchasing cost involved = 100\times\frac{49}{8} + 2% of 100\times\frac{49}{8}

= 612.5 + 0.02 × 612.5

= $624.75

also,

Total income from sales of stocks

= Total selling cost of shares - brokerage paid

= $24 × 100 - 2% of Total selling cost

= $2400 - ( 0.02 × $2400 )

= $2400 - $48

= $2,352

now,

The investor's percent gain on this investment = \frac{\textup{Income-invested amount}}{\textup{Invested amount}}\times100\%

= \frac{\textup{2,352 - 624.75}}{\textup{624.75}}\times100\%

= \frac{\textup{1727.25}}{\textup{624.75}}\times100\%

= 276.47% ≈ 280%

Hence, the correct answer is option (C) 280%

7 0
3 years ago
Suppose that a jewelry store found that when it increased prices by 10 percent, sales revenue increased by 3 percent. Which of t
Anna11 [10]

Answer:

The correct answer is Demand is inelastic, but not perfectly.

Explanation:

Inelastic demand is that demand that is not very sensitive to a change in price. In this way, before a variation in the price the quantity demanded reacts in a less than proportional way. For example, if the price increases by 10% and in response the quantity demanded is reduced by less than 10%, then the demand is said to be inelastic.

The elasticity of demand, also known as the elasticity-price of demand, is defined as the percentage change of the quantity demanded before a percentage change in the price.

4 0
3 years ago
In which situation would it be better to use a credit card instead of cash?
bonufazy [111]
Computer, its a larger amount of money to pay so it would be best there

6 0
3 years ago
Public aid is given the water carriers in the form of waterway construction, development and maintenance. How do the water carri
alex41 [277]

Answer:

By paying user charges in the form of lock fees and fuel taxes.

Explanation:

The water carriers in repaying the government for the water way construction aid received do this by paying user charges in the form of lock fees and fuel taxes.

7 0
3 years ago
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