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Anon25 [30]
3 years ago
15

Company A has a beta of 0.70, while Company B's beta is 1.45. The required return on the stock market is 11.00%, and the risk-fr

ee rate is 4.25%. What is the difference between A's and B's required rates of return? (Hint: First find the market risk premium, then find the required returns on the stocks.) Do not round your intermediate calculations.
Business
1 answer:
stira [4]3 years ago
8 0

Answer:

company B's cost of equity is 14.0375% - 8.975% = 5.0625% higher than company A's cost of equity

Explanation:

cost of equity = risk free rate + (beta x market premium)

risk free rate = 4.25%

market premium = market return - risk free rate = 11% - 4.25% = 6.75%

Company A's cost of equity = 4.25% + (0.7 x 6.75%) = 8.975%

Company B's cost of equity = 4.25% x (1.45 x 6.75%) = 14.0375%

this means that company B's cost of equity is 14.0375% - 8.975% = 5.0625% higher than company A's cost of equity.

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Frito-Lay has developed a new line of snack foods. The company wants to place the products in as many outlets as possible; groce
Katen [24]

Answer: Intensive distribution

Explanation:

Here, in this particular case Frito-Lay is trying to accomplish the <em>Intensive Distribution</em>. Intensive distribution is referred to as the marketing strategy under which an organization tends to sell their respective commodity through their several outlets or store as, in order to have the individuals and their respective customers confront the commodity virtually almost everywhere.

3 0
3 years ago
Classifying Cash Flows - Identify whether each of the following would be reported as an operating, investing, or financing activ
Yanka [14]

Answer:

<em><u>Classifying Cash Flows:</u></em>

Retirement of bonds payable  ⇒  <em><u>Financing activity</u></em>

Purchase of inventory for cash  ⇒  <u><em>Operating activity</em></u>

Cash sales  ⇒  <u><em>Operating activity</em></u>

Repurchase of common stock  ⇒  <em><u>Financing activity</u></em>

Payment of accounts payable  ⇒  <u><em>Operating activity</em></u>

Disposal of equipment ⇒  <em><u>Investing activity</u></em>

8 0
3 years ago
Modern Federal Bank is setting up a brand-new branch. The cost of the project will be $1.2 million. The branch will create addit
KonstantinChe [14]

Answer:

23.12%

Explanation:

Internal rate of return (IRR) is the rate at which the Net present value (NPV) of a project equals to zero.

Using a financial calculator and the CF function, input the following to find IRR;

Initial investment; CF0 = -1,200,000

Yr1 cashflow inflow ; C01 = 235,000

Yr2 cashflow inflow ; C02 = 412,300

Yr3 cashflow inflow ; C03 = 665,000

Yr4 cashflow inflow ; C04 = 875,000

Then key in IRR CPT = 23.119%

Therefore, the Internal rate of return this expansion is 23.12%

3 0
3 years ago
The management accountant at light manufacturing oversees the​ company's dayminustominusday operations at the firm. the manageme
mariarad [96]

The above is an example of directing

Directing is one of the responsibilities of a management accountant. It involves governing the operations of a company in a particular direction. It is a process through which the manager guides the performance of workers to achieve set goals.

4 0
3 years ago
Manuel is retired and receives a fixed payment from his pension each month. when there is inflation?
ziro4ka [17]

Manuel is retired and receives a fixed payment from his pension each there is inflation when the buying power of his pension will fall

This is further explained below.

<h3>What is inflation?</h3>

Generally, Inflation refers to the rate at which prices continue to grow during a certain period of time, and the term may also refer to inflation itself. In most cases, inflation is assessed on a broad scale, such as the overall increase in prices or the growth in the cost of living in a particular nation.

To put inflation in its most basic form, it may be thought of as the general upward trend in the prices of goods and services over time. What this implies is that a dollar spent now won't purchase as much in the future. In other words, it will lower your ability to purchase things in the future.

In conclusion, Manuel is now retired and receives a certain amount from his pension on an annual basis. In the event that there is inflation, Manuel will be able to buy a lesser total amount with his pension money.

Read more about inflation

brainly.com/question/15692461

#SPJ1

8 0
2 years ago
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