Cost of equity is calculated as -
Cost of equity = Risk free return + Beta * (Market risk - Risk free return)
Given,
Risk free return = 5.3 %
Market risk = 12 %
Beta = 1.05
Cost of equity = 5.3 % + (1.05*(12-5.3%))
Cost of equity = 12.335 % or 12.24 %
Answer
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Explanation
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$5,040 since Irene earned nearly earned about $4,800 less than what she would be making if she did not make her early withdrawal.
Answer:
I would prefer Asset B
Explanation:
A risk averse investor is the one who prefers lower amount of returns with known or specific risks instead of the higher amount of returns with unknown risks. So, from among the various level of risks, the investor will be preferring the alternative with the least interest.
So, in this case,
In Asset A: pay a return of $2,000 and at 20% of time and the $500 at 80% of time.
In Asset B: pay a return of $1,000 and at 50% of time and the $600 at 50% of time.
So, I would prefer, Asset B as it has low return but have a known risk that is of 50 -50.
Solution:
Given,
R= 16%
g= 8%
Calculate stock value ,
=
x (1+g) ;
D1= 2.16
P0= ( 2.16/0.16 )-0.08
P0= $27
A value stock is a lower price protection exchange that can otherwise be implied by the performance of the company.
