Answer:
The cost of equity based on the CAPM is 10.888%
Explanation:
The cost of equity of the stock or the required rate of return (r) is the minimum return required by investors to invest in a stock. The CAPM approach provides an equation to calculate the required rate of return (r) based on the risk free rate, stock's beta and the market risk premium. The formula for r is,
r = rRF + Beta * (rM - rRF)
Where,
- rRF is the risk free rate or rate on T bills
- rM is the expected return on market
r = 0.042 + 0.88 * (0.118 - 0.042)
r = 0.10888 or 10.888%
Answer:
depletion expense for 2018 6,019.18
Explanation:
$526,000 cost
1,031,000 tons
We have a cost(the mine) which is associate with an asset available, that will be depleted over time (iron ore)
So we have to distribute this cost at the rate this asset is being depleted:
cost/tonds of iron ore = depletion per ton
526,000/1,031,000 = 0.5101
Then we multiply this rate by the extracted amount of 2018
depletion expense for 2018
0.5101 x 11,800 = 6,019.18
Answer:
$3.7557
Explanation:
The computation of one share of this stock worth is shown below:-
Years Dividend Present value Present value
factor at 16%
0 $2.50
1 $2.00 0.8621 $1.7241
2 $1.50 0.7432 $ 1.1147
3 $1.00 0.6407 $0.6407
4 $0.50 0.5523 $0.2761
Total $3.7557
Present value factor at 16% = (1 ÷ (1 + discount rate))^years
Answer:
Different is favorable to the zero-coupon by 2.2%
I would prefer to invest in the zero-coupon as their yield is higher
Explanation:
we divide the future value of the zero coupon with ther current market value to determinate the rate
r = 0,14210 = 14.2%
the saving account yields 12% which is lower than the zero coupon rate thereofre I would be better to ivnest in the zero-coupon.
Answer:
Blue Company
Consolidation of Parent & Subsidiary Companies :
1. c. $86,000
2. b. $47,000
3. d. $39,000
Explanation:
In preparing a consolidated income statement, Blue Company with controlling interest of 60% will eliminate intercompany transactions, sales, purchases, inventory, and profits. This is because such transactions are assumed to be within the same consolidated entity.
Only such transactions involving outsiders are taken into consideration for the purpose of determining profits and arriving at the financial position of the consolidated group.