Answer and Explanation:
The preparation of the First stage allocation of overhead costs to the activity cost pools is presented below
Particulars Making awnings Job Support Other Total
Production Overhead $67,500 $60,000 $22,500 $150,000
Office Expenses $8,000 $65,000 $27,000 $100,000
The production overhead is allocated in 45% 40%, 15% and 100%
And,
The office expenses is allocated in 8%, 65%, 27% and 100%
The same is shown above
Answer:
Explanation:
Dividend discount model (DDM) is a method of calculating the cost of equity. The formula is as follows;
cost of equity; r = (D1/P0) +g
whereby, D1= next year's dividend
P0 = Current price of the stock = 27
g = the stock's dividend growth rate = 8% or 0.08 as a decimal
D1 = D0 (1+g)
D1 = 2 (1+0.08) = 2.16
Next, plug in the numbers to the formula
r = (2.16/27)+0.08
r = 0.08 + 0.08
r = 0.16 or 16%
<u>Cost of equity using CAPM</u>
CAPM is Capital asset pricing model. It is also used to estimate the cost of equity.
CAPM; r = risk free + beta ( market risk premium)
r = 0.10 +1.2(0.05)
r = 0.10 + 0.06
r = 0.16 or 16%
Therefore, DDM and CAPM give the same cost of equity.
Answer:
The answer is 14%
Explanation:
Formula for Future value (FV) FV = PV (1+ni)
Whereas FV= Future value, PV = present value, n= number of years, i= TVOM in percentage
Rearranging the formula for i
i = (FV/PV)-1
So, i = (5,700/5,000)-1
i = 1.14-1
i = 0.14
i = 14%
(0.14x100=14%)
To Calculate YTM,
YTM = {C + (F-P)/n}/(F+P)/2
where C = coupon rate,
F = face value
P = price
n = no.of years
Therefore, YTM = {90+(1000-874.6)/7}/(1000+874.6)/2
=> 11.72%
