The common characteristic possessed by all assets is:

The following information is provided for each division. Investment Center Net Income Average Assets Cameras and camcorders $ 6,

kotegsom [21]

Answer and Explanation:

The calculation of the residual income for each division is given below:

<u>Target Income Cameras & Camcorders Phones & Comm Computers & Acc. </u>

Average Assets $20,600,000 $21,500,000 $16,600,000

Target Return 14% 14% 14%

Target Income $2,884,000 $3,010,000 $2,324,000

<u>Residual Income Cameras & Camcorders Phones & Comm Computers & Acc.</u>

Net Income $6,800,000 $3,010,000 $1,100,000

Less: Target Income $2,884,000 $3,010,000 $2,324,000

Residual Income $3,916,000 $0 -$1,224,000

6 0

3 years ago

If the real rental price of capital is $10,000 per unit and the real cost of capital is $9,000 per unit, to maximize profits a f

Phoenix [80]

Answer:

Add to its capital stock.

Explanation:

Rental firms earn profit by buying goods and renting them out at a price higher.The advantage of owning capital is the real rental price of capital for the units of capital owned and rented.

In this case, the real rental price of capital is $10,000 per unit where as the real cost of capital is $9,000 per unit. This means the firm is getting a profit from the business of $1000 per units assuming interest on their loans, cost of loss/ gain on the price of capital and depreciation costs are taken care.To maximize profit at this level, the firm can increase capital stock by buying more goods and renting them out at the current real rental price of capital.

8 0

3 years ago

Stock in Daenerys Industries has a beta of 1.2. The market risk premium is 6 percent, and T-bills are currently yielding 4.9 per

kobusy [5.1K]

Answer:

The best estimate of the company’s cost of equity is 12%

Explanation:

Estimate of the company’s cost of equity = (Required Return as per Capital Asset Pricing Model + Cost of Equity) / 2

Required Return as per Capital Asset Pricing Model = Risk Free rate + Market Risk Premium * Beta

= 4.9 % + ( 6% * 1.2)

= 0.049 + 0.06 * 1.2

= 0.049 + 0.072

= 0.1210

= 12.10%

Cost of Equity = (Expected Dividend/Price) + Growth Rate

= [( $ 1.30 * 1.08) / $ 36] + 8%

= 0.039 + 0.08

= 0.1190

= 11.90%

The best estimate of the company’s cost of equity = (12.10 % + 11.90 % )/ 2

= 24% / 2

= 12%

Hence, the best estimate of the company’s cost of equity is 12%

6 0

3 years ago

The economic term for the want-satisfying ability, or value, that organizations add to goods or services is

Lana71 [14]

The economic term for the want-satisfying ability, or value, that organizations add to goods or services is utility.

<h3>What is utility?</h3>

Utility refers to the amount of satisfaction a consumer derive from the consumption of certain commodities.

It is the importance or value added to a product or service that helps gives the consumer useful information about all products and services.

Hence, the economic term for the want-satisfying ability, or value, that organizations add to goods or services is utility.

Learn more about utility here : brainly.com/question/24848038

4 0

2 years ago

Blue Spruce, Inc. is considering purchasing equipment costing $72000 with a 6-year useful life. The equipment will provide annua

Stella [2.4K]

The approximate internal rate of return for this investment is $0.054.

<h3><u>What is rate of return?</u></h3>

The net gain or loss of an investment over a given time period, stated as a percentage of the investment's starting cost, is known as a rate of return (RoR).
You determine the percentage change from the start of the period to the end when computing the rate of return.
Any type of investment instrument, including real estate, bonds, equities, and fine art, can be subject to a rate of return (RoR).

Any asset can be used with the RoR as long as it is purchased once and generates cash flow at some point in the future. The attractiveness of various investments can be determined, in part, by comparing their historical rates of return to those of comparable assets.

We have, (Net Annual cash inflow x PV of an Annuity of 1 at 10%) - Initial Investment = Net present value (find closest to zero))

($17,514 x 4.111) = $72000.054 - $72,000 = $0.054 (closest to zero).

Know more about rate of return with the help of the given link:

brainly.com/question/24232401

#SPJ4

6 0

1 year ago