Answer:
the formula used to calculate the cost of equity (required rate of return) based on the bond yield plus risk premium is fairly simple:
cost of equity (Re) = yield of debt (bonds) + firm's risk premium = 11.52% + 3.55% = 15.07%
I'm not sure if the question was copied correctly or not, so I looked for similar questions and it included different numbers.
<em>The Harrison Company is closely held and, therefore, cannot generate reliable inputs with which to use the CAPM method for estimating a company's cost of internal equity. Harrison's bonds yield 10.28%, and the firm's analysts estimate that the firm's risk premium on its stock over its bonds is 4.95%. Based on the bond-yield-plus-risk-premium approach, Harrison's cost of Internal equity is: = 10.28% + 4.95% = 15.23%</em>
<em>Another question: </em>
<em>The Kennedy Company is closely held and, therefore, cannot generate reliable inputs with which to use the CAPM method for estimating a company's cost of internal equity. Kennedy's bonds yield 11.52%, and the firm's analysts estimate that the firm's risk premium on its stock over its bonds is 4.95%. Based on the bond-yield-plus-risk-premium approach, Kennedy's cost of internal equity is: = 11.52% + 4.95% = 16.47%</em>
Answer:
$43
Explanation:
The total cost incurred by the company is made of two classes of cost namely; Fixed and variable cost. While the fixed cost is constant, the variable cost is dependent on the number of tractors produced.
A such,
Fixed cost = $550,000
Variable cost = 22000 × $180 = $396,000
Total cost = $550,000 + $396,000
= $946,000
The average cost per tractor is the result of the ratio of the total cost to the number of tractors
average cost per tractor = $946,000/22,000
= $43
The one are in which manufacturers do not have to use due care is :
using adequate test marketing
They only need to use it in an area where they may unintentionally cause harms to other people
The price of the bond if the yield to maturity falls to 7%, based on the period and amount will be $1,620.45.
<h3>What is the price of the bond at 7%?</h3>
We shall assume that the bond has a face value of $1,000.
The coupon is:
= 12% x 1,000
= $120
The price is:
= (Coupon x Present value interest factor of annuity, 30 years, 7%) + Face value of bond / ( 1 + rate) ^ number of periods
= (120 x 12.409) + (1,000 / (1 + 7%)³⁰)
= $1,620.45
Find out more on bond pricing at brainly.com/question/25596583.
Answer:
d. $13.00
Explanation:
contributon margin = selling price - variable cost
sales price: $25 per unit
<u>list of variable cost:</u>
Direct mateirals 6.20
Direct labor 2.80
variable overhead 1.45
sales commisions 1.00
adminsitrative variable<u> 0.55 </u>
total variable cost 12.00
$25 selling price per unit - $12 variable cost per unit =
$13 contribution margin per unit
This is the amount each units "contributes" to ay the fixed cost and make a gain during the period.
