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zzz [600]
2 years ago
5

Wrote Analysts has just used the CAPM model to compute an rE of 18.679% for the VaperWare company. It found rE by, among other t

hings, computing Beta from a regression between the historical stock returns of Vaperware and the SPY ETF. The R2 of this regression was 12%.
Required:
What could possibly be problematic with WroteAnalysts' estimated rE for the VaperWare company?
Business
1 answer:
snow_tiger [21]2 years ago
5 0

Answer:

What Grade is this again?

You might be interested in
Lok Co. reports net sales of $4,970,000 for Year 2 and $8,532,000 for Year 3. End-of-year balances for total assets are Year 1,
Mumz [18]

Answer:Assets turnover ratio Year 2 =2.87 times

Assets turnover ratio for Year 3  = 4.58times

Explanation:

The total assets turnover is calculated as  = Net Sales / Average total assets

also,  

Average total assets = (Beginning assets + Ending Assets) / 2

Average total assets for Year 2 = ($1,684,000 +$1,780,000)/ 2 =$1,732,000

Average total assets for Year 3 = ($1,780,000 + $1,949,000 )/2 =$1,864,500

Assets turnover ratio Year 2 =$4,970,000 / $1,732,000 = 2.87 times

Assets turnover ratio for Year 3  = $8,532,000  / $1,864,500 = 4.58times

6 0
3 years ago
Read 2 more answers
Companies HD and LD are both profitable, and they have the same total assets (TA), total invested capital, sales (S), return on
GaryK [48]

Answer:

Option D is correct.

Explanation:

Both company will have same Equity multiplier as total assets and equity are same of both companies. So Option A and B is incorrect.

Option C is also incorrect because there is no difference between the sales and total assets of both companies.

Option D is correct because the return on equity of the company LD is higher as the Net profit which is profit after interest and tax is higher than the profit after interest and tax of the company HD.

ROE = PAIT / Equity

Option E is wrong because when we say ROA is same this means that the operating income is same.

ROA = Operating profit / Total assets

Remember that the operating profit is earnings before interest and tax.

7 0
3 years ago
What is a significant part of the step of evaluating controls and determining which controls to implement?
Kisachek [45]

Answer:

"CBAs" would be the appropriate answer.

Explanation:

  • The CBAs system was intended to incorporate various business practices and knowledge across multiple security experts as well as provide a structured process to match application development policies and procedures with either the institution's threat analysis.  
  • As either a consequence, a structure is developed to enhance their safety infrastructure of business process development.
6 0
2 years ago
A younger client with a moderate amount of funds is considering the purchase of a home in the near-term future. For this reason,
Valentin [98]

Answer:

c) Investment in a DPP (Direct Participation Program)

Explanation:

Direct Participation Programs are a form of limited partnership. DPP has the lack of liquidity, since ownership interests are not always freely transferrable and require the approval of a general partner of the DPP. Each of the other items listed are more liquid on a short-term basis. Bonds can be sold, bond fund shares can be redeemed, equities are easily sold in the secondary market, and though CDs are not transferrable, the maximum maturity is 1 year or less, so the client would have short-term access to the funds invested.

8 0
3 years ago
Read 2 more answers
EB5.
rusak2 [61]

Answer:

1. Break-even in units is 6,000 units

2. Break-even in dollars is $720,000

3. Contribution Income Statement for 10,000 units

Sales revenue (10,000 x 120)    $1,200,000

Variable cost   (10,000 x 90)       <u> (900,000)</u>

Contribution margin                    $300,000

Fixed cost                                     <u> (180,000)</u>

Profit                                              $120,000

4. Units to sell is 16,000

5. Dollars sale is $1,920,000

6. Contribution Income Statement for $2,400,000 sales revenue

Sales revenue (20,000 x 120)    $2,400,000

Variable cost   (120,000 x 90)     <u> (1,800,000)</u>

Contribution margin                       $600,000

Fixed cost                                       <u> (180,000)</u>

Profit                                              $420,000

Explanation:

1. To compute the Break-even point in units,

Formula is BEP = total fixed cost / unit contribution margin

 <em>Step 1. Compute the unit contribution margin</em>

Unit selling price              $120

Less : variable cost             <u> 90</u>

Unit contribution margin   $30

  <em>Step 2. compute the unit break-even in units using the formula.</em>

BEP = total fixed cost / unit contribution margin

BEP = $180,000 / 30

BEP = 6,000 units

2. To compute the Break-even point in dollars,

Formula is BES = total fixed cost / contribution margin ratio

 <em>Step 1. Compute the contribution margin ratio</em>

Unit selling price              $120

Less : variable cost             <u> 90</u>

Unit contribution margin   $30

So, $30 divided by $120 equals 25% (CMR)

  <em>Step 2. compute the unit break-even in dollars using the formula.</em>

BEP = total fixed cost / contribution margin ratio

BEP = $180,000 / 25%

BEP = $720,000

3. To prepare the contribution margin income statement, we will multiply the units sold of 10,000 units by $120 to get the sales revenue. Then multiply 10,000 units by $90 to get the variable cost. Further illustration below;

Sales revenue (10,000 x 120)    $1,200,000

Variable cost   (10,000 x 90)       <u> (900,000)</u>

Contribution margin                    $300,000

Fixed cost                                     <u> (180,000)</u>

Profit                                              $120,000

4. To compute the units to sell to realize the target profit we will use the formula:

(Total fixed cost +  Target profit )/ unit contribution margin

 <em>Step 1. Compute the unit contribution margin</em>

Unit selling price              $120

Less : variable cost             <u> 90</u>

Unit contribution margin   $30

  <em>Step 2. compute the units to sell using the formula.</em>

(Total fixed cost + target profit) / unit contribution margin

($180,000  + $300,000) / 30

Answer is 16,000 units

5. To compute the sales in dollars to realize the target profit of $300,000,

Formula is (Total fixed cost + target profit) / contribution margin ratio

 <em>Step 1. Compute the contribution margin ratio</em>

Unit selling price              $120

Less : variable cost             <u> 90</u>

Unit contribution margin   $30

So, $30 divided by $120 equals 25% (CMR)

  <em>Step 2. compute the target sales in dollars using the formula.</em>

(Total fixed cost + target profit) / contribution margin ratio

($180,000 + $300,000) / 25%

$480,000 / 25%

Answer is $1,920,000

6. Contribution Income Statement for $2,400,000 sales revenue. FIRST we must determine how many unit are sold to have that sales revenue. $2,400,000 sales revenue divided by unit selling price equals 20,000 units. To further illustrate, see presentation below.

$2,400,000 / $120 = 20,000 units

Sales revenue (20,000 x 120)    $2,400,000

Variable cost   (120,000 x 90)     <u> (1,800,000)</u>

Contribution margin                       $600,000

Fixed cost                                       <u> (180,000)</u>

Profit                                              $420,000

4 0
3 years ago
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