Answer:
The correct answer is letter "B": The rate of return decreases.
Explanation:
Net Present Value or NPV is a mathematical calculation used to determine if a project could be profitable or not. NPV is obtained by subtracting the present value of outflows from the present value of inflows, In case NPV is positive, it is expected a project will provide the firm profits, while a negative NPV implies the company incurring in losses.
<em>The Rate of Return (RoR) has an inverse relation with the NPV meaning if the RoR decreases the NPV will increase and vice versa.</em>
Answer:
Correct option is (D)
Explanation:
Given:
Purchase price of copyright = $50,000
Expected useful life = 5 years
Annual depreciation expense as per straight line method:
= Purchase price ÷ useful life
= 50,000 ÷ 5
= $10,000
Only useful life is considered and not legal life.
Carrying value of asset at the end of year = Book value of asset - annual depreciation
Carrying value of copyright at then end of first year = 50,000 - 10,000 = $40,000
Carrying value of copyright at then end of second year = 40,000 - 10,000 = $30,000
Answer:
β of the stock = 1
Explanation:
Given:
α of a stock = 0%
Return on the market index = 16%
Risk-free rate of return = 5%
Required rate = 11% + 5% = 16%
β of the stock = ?
Computation of β of the stock:
Required rate = Risk-free rate of return + [β (Return on the market index - Risk-free rate of return)]
16% = 5% + [β (16% - 5%)]
16% - 5% = β (16% - 5%)
11% = [β (16% - 5%)
11% = [β (11%)
β of the stock = 1
Answer:
C
Explanation:
Because they need to know they will be successful in the new market.
