1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Goryan [66]
3 years ago
9

Linke Motors has a beta of 1.30, the T-bill rate is 6.5%. The annual return on the stock market during the past 3 years was 15.0

0%, but investors expect the annual future stock market return to be 13.00%. Based on CAPM, what is the firm's required return
Business
1 answer:
Bess [88]3 years ago
5 0

Answer: 14.95%

Explanation:

The firm required return is;

= Risk free rate + beta * (Market return - RIsk free rate)

= 6.5% + 1.30 * ( 13% - 6.5%)

= 14.95%

<em>It is better to use the estimated future return. </em>

You might be interested in
Molly liquidates her catering business. She is left with $20,000 after selling all the assets and settling the liabilities. In t
Firdavs [7]

Answer:

In this case, the amount of $20,000 represents the owner's equity.

Explanation:

Assets:

Assets are the items that are own by a business. Examples of assets are inventory, machinery, company owned vehicles etc.

Liabilities:

Liabilities are the items a business owes to others. Examples of liabilities are bank dept, taxes, mortgage debt etc.

Equity:

Owner's equity is also known as net assets refer to the owner share of assets when the liabilities are paid off.

The relation between Assets, liabilities and owner equity are represented in a equation as:

Assets = Liabilities + Owner Equity

8 0
3 years ago
Elijah and anastasia are husband and wife who have five married children and nine minor grandchildren. for 2015, what is the max
s344n2d4d5 [400]
To get the answer, you need to calculate this:
19 donees (5 married children + 5 spouses + 9 grandchildren) ×$14,000 (annual exclusion for 2016) × 2 donors (Elijah and Anastasia) = 19(14000) (2)
=19(28000)
=532,000
Through this, you will get the answer of $532,000
4 0
3 years ago
Read 2 more answers
Riemer, Inc. has four departments. Information about these departments is listed below. Maintenance is a service department. If
Norma-Jean [14]

Answer:

a. $3,520.

Explanation:

The computation of the amount of maintenance cost allocated to the Cutting Department is given below:

= maintenance cost ÷ total floor space excluding maintenance cost

= $20,000 ÷ 6,250 × 1,100

= $3,520.

hence, the option is A.$3,520.

The 6,250 comes from

= 1,100 + 2,100 +  3,050

= 6,250

8 0
3 years ago
Cordner Corporation has two production Departments: P1 and P2 and two service departments: S1 and S2. Direct costs for each depa
Goryan [66]

Solution:

S1  $180,000 is allocated 70% to S2 or $126,000 ( 0.7 * 180,000 )

S2  total is $162,000 + $126,000 = $288,000

S2  $126,000 is allocated 19.7% to P2 or $81000

Under the step-method of cost allocation,

the amount of costs allocated from $2 to P2 would be $81000

5 0
3 years ago
Smiley Industrial Goods has $1,000 face value bonds on the market with semiannual interest payments, 13.5 years to maturity, and
Snezhnost [94]

Answer:

Annual Coupon rate =  66.56990711 / 1000 = 0.06656990711 or 6.656990711% rounded off to 6.66%

Option B is the correct answer

Explanation:

To calculate the price of the bond today, we will use the formula for the price of the bond. We assume that the interest rate provided is stated in annual terms. As the bond is a semi annual bond, the coupon payment, number of periods and semi annual YTM will be,

Coupon Payment (C) = C

Total periods (n) = 13.5 * 2 = 27

r or YTM = 0.064 * 6/12 = 0.032 or 3.2%

The formula to calculate the price of the bonds today is attached.

We will first calculate the value of semi coupon payment  made by the bond.

1023 = C * [( 1 - (1+0.032)^-27) / 0.032]  + 1000 / (1+0.032)^27

1023 = C * 17.8994796  +  427.2166529

1023 -  427.2166529  =  C * 17.8994796

595.7833471 / 17.8994796  =  C

C = 33.28495355 rounded off to 33.28

The annual coupon payment will be = 33.28495355 * 2 = 66.56990711 rounded off to 66.57

Annual Coupon rate =  66.56990711 / 1000 = 0.06656990711 or 6.656990711% rounded off to 6.66%

4 0
3 years ago
Other questions:
  • Which of the following factors increases pressures for cost reductions? a. Meaningful differentiation between products b. Reduce
    13·1 answer
  • A gantt chart is built using established precedence relationships. <br> a. True <br> b. False
    6·1 answer
  • The evidence of debt and personal promise to repay that debt is called
    8·1 answer
  • Is it easy to start or stop a mma investment
    9·1 answer
  • How do you spell proportional
    8·2 answers
  • Coronado Industries is planning to sell 750000 units for $1.50 per unit. The contribution margin ratio is 20%. If Coronado will
    7·1 answer
  • How much would you have to deposit today if you wanted to have $54,000 in five years? Annual interest rate is 8%. (PV of $1. FV
    12·1 answer
  • Identify the change in the parent function that will produce the related function shown as a dash line. f(x)= √ x
    7·1 answer
  • In a monopoly:_________.
    15·1 answer
  • Rosalie is a sales consultant for Avon Cosmetics. This illustrates
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!