Booher Book Stores has a beta of 0.5. The yield on a 3-month T-bill is 3% and the yield on a 10-year T-bond is 7%. The market risk premium is 4.5%, and the return on an average stock in the market last year was 14%. What is the estimated cost of common equity using the CAPM? Round your answer to two decimal places.
Answers
The estimated cost of common equity using the CAPM is 0.08 or 8%.
The CAPM stands for the capital asset pricing model. It is utilized for determining the required return on an equity investment that is risk-free and for taking into account the risk incurred by a specific investment. CAPM (Capital Asset Pricing Model) is used for determining the required return on an equity investment that is risk-free and for taking into account the risk incurred by a specific investment.
The calculation of the cost of equity using the CAPM is given below:$$r_{e}=r_{f}+\beta \times (r_{m}-r_{f})$$Where; $r_{e}$= cost of equity, $r_{f}$= risk-free rate of return, $\beta$= beta, $r_{m}$= expected return of market now, let's put the given values in the above formula to calculate the cost of equity:$$r_{e}=0.03+0.5(0.14-0.03-0.045)$$On solving this, we get:$$r_{e}=0.08$$Therefore, the estimated cost of common equity using the CAPM is 0.08 or 8%.
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Related Questions
Due to the necessity of living on a fixed income, many retirees find it difficult to _______. a. Afford to keep their large homes b. Maintain their old standard of living c. Pay for unexpected expenses d. All of the above
Answers
Answer:
D:all the above
Explanation:
i took the unit test.
Answer:
Its 100% D
Explanation:
Got a 100%
An international business is a firm that
Part 2
A. hires non-U.S. citizens.
B. produces a wide range of products.
C. is not from the United States.
D. engages in international trade or investment.
Answers
Option D: An international business is a firm that engages in international trade or investment.
Therefore, the correct answer is option D. An international business is a company that conducts business across national borders. This can include importing and exporting goods, investing in foreign markets, and operating in multiple countries.
It is not necessarily defined by the nationality of its employees, the range of products it produces, or the country in which it is headquartered. International business refers to the trade of goods, services, technology, capital and/or knowledge across national borders and at a global or transnational scale. It involves cross-border transactions of goods and services between two or more countries.
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What are the major difference between a ditribution channel for a buine making tangible product and a firm producing hopitality and travel product
Answers
Distribution channel for making tangible products represents businesses which buyers pay for a good or a service.
What does a company that manufactures tangible goods use as a distribution channel?The Internet, retailers, wholesalers, and marketers are instances of distribution channels. The producer sells to the consumers directly through a direct distribution platform. Before the product reaches the end customer, there are several middlemen involved in indirect channels.
What differentiates the distribution channel from the sales channel?Businesses depend on sales channels, that are points of contact with their clients, to reach out them and supply a service or product. As many divergent routes the product can take to reach the final consumer can be seen in these distribution networks.
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which of the following is also known as profit and loss statement?
net worth ledger
liability statement
income statements
transaction ledger
Answers
A financial statement that outline the revenues and costs during a period of time.
Another name for the profit and loss statement is the income statement.
The income statement is a financial statement that is used to record a firm's income and expenses in a given year. It contains information on the total profit or loss of a firm.
A balance sheet is a financial statement that contains information on a reports company's assets, liabilities and shareholders' equity at a point in time.
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Jaimie plans to buy a new swimsuit for her spring break cruise. She has not seen this year's styles and thus will do some comparison shopping before making a purchase decision. Jaimie is engaging in Group of answer choices limited decision making. routinized response behavior. impulse buying. extended decision making. intensive decision making.
Answers
Jaimie is engaging in limited decision making as she plans to do comparison shopping for a new swimsuit before making a purchase decision.
Jaimie is engaging in "limited decision making." Limited decision making refers to a moderate level of information search and evaluation of alternatives when making a purchase decision. In this case, Jaimie wants to buy a new swimsuit for her spring break cruise but has not seen the current year's styles. She plans to do some comparison shopping, indicating that she will gather some information and compare different options before making a decision. This level of decision-making is considered less extensive than "extended decision making" or "intensive decision making," where more time and effort are invested in researching and evaluating alternatives.
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At a shop, hamburgers cost $0.83 each, fries are $0.74,
sodas are $1.45. Paul purchased two hamburgers, three fries, and four
sodas. How much money did he spend at the shop?
Answers
Burgers cost $0.83 each, fries $0.74, and sodas $1.45 at a restaurant. Paul bought four sodas, three fries, and two hamburgers. His total spending at the store was $9.68.
An illustration of total spendingThe total of the costs of several goods or services multiplied by the cost of each item bought.
As an illustration, consider a scenario in which a business that sells cars decides to charge USD 20,000 for a single vehicle. 200 cars are sold at a such price by the corporation in a specific period. For this example, the total expenditures would be 20 times USD 20,000, or USD 400,000.
Cost of 2 hamburgers= $0.83 X 2= $1.66
Cost of 3 fries= $0.74 X 3= $2.22
Cost of 4 sodas= $1.45 X 4= $5.8
Total money he spend= $1.66 + $2.22 + $5.8= $9.68
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1. What PECs must she possess if there are customer who complain about the quality of her product???
a.patience
b. hardworking
c. versatile
d. all of the above
2.which of the following is not considered as a characteristics of an entrepreneur??
a.copes with failure
b. dependent
c.persistent
d. opportunity seeker
3.If she wants to ensure a profitable business operation, what characteristics will she maintain??
a.commitment
b.goal oriented
c.futuristic or future oriented
d. opportunity seeker
4.Mrs. Magno follows the advice of a friend to be flexible especially if she intends to open a retail business.
What PECs has been demonstrated by mrs. magno??
a.self confidence
b. reliable and has integrity
c.responsive to feedback
d. persistent
5.She tells mary , her best friend that she has a strong will and does not give up to find a solution to a business problem.
What PECs has been demonstrated by Mrs.Magno
a. hard work
b. persistence
c. self confidence
d. risk taking
Please I need help
Answers
Answer:
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Jobs sights on the internet tend to be all alike. True or false?
Please help I’ll give Brainly to the best answer thanks!
Answers
Answer: True
Explanation:
which inventory system responds to a channel member's inventory needs by drawing the product through the distribution channel
Answers
Reactive/Pull Inventory System responds to a channel member's inventory needs by drawing the product through the distribution channel.
What is a pull inventory system?In a lean manufacturing technique known as the pull system, products are produced in response to real demand rather than expectations. In this type of strategy, businesses merely maintain an inventory and create enough product to fulfil current client requests.A neighbourhood coffee shop that prepares coffees and other hot beverages based on client requests is an example of a pull system. The procedure of making hot beverages doesn't start until a consumer places an order.Advantages. The pull method is customer-focused, has a little inventory, may enhance cash flow, and makes products to order. In contrast, the Push system has a long list, is producer-centric, can manufacture to order, and bases demand on forecasts.Learn more about pull inventory system refer to :
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Hi there can someone help me please with this assignment thank you.
Objectives
.Create a newsletter using word processing software.
Directions
In this assignment, you'll use a word processor to create a newsletter based on the following scenario: Suppose that you are a secretary at a high school. You need to provide the students with information about upcoming events and a reminder about the cell-phone policy. The cell-phone policy states that all cell phones need to be turned off while on the school campus until dismissal time. After the dismissal bell, phones may be turned on and used. The events that should be in the newsletter include a dance, chess tournament, commupity garden, basketball game, and fundraiser.
Your newsletter should fill-in the details for these events and meet these requirements:
• List school contact information.
• Fill one page.
• Include the following:
o two or three columns
• a title
• at least three graphics, but not more than six
When you've finished creating your newsletter, remember to spell check and proofread. Then save your newsletter and upload it.
Answers
Create a one-page newsletter using word processor software for a high school that includes contact information, upcoming events, and the cell phone policy. Use two or three columns, a title, and at least three graphics but not more than six.
To create the newsletter, open a word processor software and create a new document. Add the school's contact information, including phone number, address, and email. Then, list the upcoming events, such as the dance, chess tournament, community garden, basketball game, and fundraiser.
Provide details for each event, including date, time, location, and any necessary information. Add a section about the cell phone policy, reminding students to turn off their phones while on the school campus until dismissal time.
Use two or three columns to organize the information and make it visually appealing. Add a title and at least three graphics but not more than six to make the newsletter engaging. Finally, proofread and spell-check before saving and uploading the newsletter.
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some small, new industries are not as efficient as their more mature foreign competitors. the argument for protecting these industries from foreign competition is known as:
Answers
The argument for protecting these less efficient small, new industries from foreign competition is known as "infant industry protection" or "infant industry argument."
The infant industry protection argument suggests that certain industries, particularly those that are new or still in their early stages of development, may not be as efficient or competitive as their more mature foreign counterparts. These industries may require time and support to gain the necessary experience, expertise, economies of scale, and technological advancements to become competitive in the global market.
Proponents of infant industry protection argue that temporary trade barriers, such as tariffs, quotas, subsidies, or other forms of government support, are necessary to shield these industries from foreign competition during their initial stages. This protection aims to provide domestic industries with the opportunity to grow, develop their capabilities, improve efficiency, and eventually become globally competitive.
The rationale behind infant industry protection is to prevent the premature decline or loss of domestic industries that may have the potential to contribute significantly to the economy in the long term. It is believed that by protecting these industries initially, they can overcome their disadvantages, become self-sustaining, and eventually contribute to economic growth and competitiveness.
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the lower-of-cost-or-market method of determining the value of ending inventory can be applied on an item by item, by major classification of inventory, or by the total inventory.
T/F
Answers
The statement, "The lower-of-cost-or-market method of determining the value of ending inventory can be applied on an item by item, by major classification of inventory, or by the total inventory" is true.
This method is used to determine the value of ending inventory by comparing the cost of the inventory with its market value.
It can be applied in the following ways:
1. Item by item: Each individual item's cost is compared to its market value, and the lower value is used.
2. Major classification of inventory: Inventory items are grouped into major classifications, and the lower-of-cost-or-market method is applied to each group.
3. Total inventory: The total cost of the entire inventory is compared to its overall market value, and the lower value is used.
In each case, the goal is to value inventory at the lower of cost or market value to ensure that inventory is not overvalued on the financial statements.
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How does having a list help save money at the grocery store? What other strategies can you use to save money at the grocery store?
Answers
Other strategies to help you save money would be...
1.Coupons
2.Sales
3.Going for cheaper brands
4.Only buying what you need
5.And more!
Plz help me I’ll make u the brainliest ( I promise)
Answers
A 50 year old individual leaves a corporate employer and receives a $50,000 lump sum distribution from the pension plan. He rolls over $30,000 of the funds within 60 days into an IRA and deposits the rest to his checking account. The individual pays:___________
Answers
Answer:
The individual pays tax on the $20000 not roll over
Explanation:
A roll over is the withdrawal of cash or other assets from a retirement plan and then using part or all of it within 60 days into another retirement plan. Roll overs are not taxable.
The individual receives $50000 and rolls over $30000 of his funds. The roll over fund is considered as an income but it is not taxable since it was done within 60 days therefore the individual is tax on the money which was not roll over.
Money not roll over = $50000 - $30000 = $20000
Therefore the individual pays tax on the $20000 not roll over
Yamato has an app on his cell phone that allows him to earn points whenever he buys food from a certain restaurant. These points can be used later to purchase additional food items from the restaurant, and they have caused Yamato to buy more food. The points serve as a(n) _____ for Yamato's buying behavior.
Answers
The points above serve as a positive reinforcer for Yamato's buying behavior.
What is positive reinforcement?This is often describe as the act that involves adding of a reinforcing stimulus that is accompanied by a behavior that makes it more evidence that the behavior will take place again in the future.
When a good outcome, event, or reward happens after an action, that specific response or behavior is known to be strengthened.
The Examples of Positive Reinforcement is Clapping and cheering.
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short-term budgets allow management to periodically evaluate performance and take timely corrective action. true or false?
Answers
A Budget is a plan you write down to decide how you'll spend your plutocrat each month. It's true.
These short- term budgets allow operation to periodically estimate performance and take corrective action. The master budgeting process generally begins with the deals budget and ends with a cash budget and calculated fiscal statements.
Creating a budget is an important pillar for all businesses. It allows you to oversee and more understand whether your business has enough profit( incoming plutocrat) to pay its charges.
A budget prepared for a period lower than a time is called short- term budget. Short term budgets are prepared for factual perpetration and it has a practical value.
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If your friend Raheem asks you, “What type of account should I use to save for retirement,” what would you tell him?
Answers
Answer:
Roth IRA account
Explanation:
The best type of account that you should save money in for Retirement is a Roth IRA account. This will allow you to put and save a maximum of $5,500 USD per year which will compound annually with interest and can be redeemed when you retire. Once you redeem your money at the age of 65 1/2 it will be completely tax-free. Meaning you have no liabilities with that money whatsoever and you can simply enjoy your retirement with that money.
Bernard, Inc. prepares a statement of cash flows using the visual inspection method. In 2016, Bernard had net income of $54,000. In addition, the following information is available:
Gain on sale of land $16,000
Decrease in inventories 10,000
Amortization of patents 4,000
Increase in prepaid expenses 3,000
What net cash provided by operating activities should Bernard report in 2016?
a. $46,000
b. $72,000
c. $49,000
d. $50,000
Answers
Visual inspection method, also known as indirect method, is a method that converts accrual basis net income into cash basis net income by using the balance sheet to adjust for cash inflows and outflows that have not yet been recognized. This method is used to prepare the statement of cash flows.
The correct option is c.
Operating activities on a Statement of Cash Flows represent the inflows and outflows of cash from core business activities. These include sales revenue, cost of goods sold, depreciation and other items. Bernard, Inc. has to determine the net cash provided by operating activities. Income statement: Net income $54,000Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense (non-cash item) $4,000Gain on sale of land (non-operating item) ($16,000) Decrease in inventories $10,000 Increase in prepaid expenses ($3,000) Net cash provided by operating activities: $49,000.
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two ways in which young entrepreneurs can benefit from the National Youth Development Agency
Answers
South Africa's National Youth Development Agency has launched the Ithubalentsha Micro Enterprise Programme, which will provide young aspirant and established entrepreneurs with training, mentorship, micro-enterprise finance, market linkages and access to business opportunities.
who is elon musk......
Answers
Answer:
Elon Musk FRS an entrepreneur and business magnate. He is the founder, CEO, and Chief Engineer at SpaceX; early stage investor, CEO, and Product Architect of Tesla, Inc.; founder of The Boring Company; and co-founder of Neuralink and OpenAI. A centibillionaire, Musk is one of the richest people in the world.
how does increase in productivity result in decrease in cost of production?
please give me a simple answer
Answers
Answer:
Explanation:
say you buy a machine that cost 1 million dollars. The more products you produce with that machine, the cheaper the production cost is.
Elaine just accepted a new job and is working with the company's HR department to fill out
paperwork. Which of the following steps is she responsible for?
a. Determine how much tax to withhold from her paychecks based on W-4 information
b. Complete a W-4 form
c. Send withholding amounts to the
federal government
d. Complete a W-2 form
Answers
As a new person that has been accepted to the new Job that has to fill the HR of the company, what she is going to be responsible for would be to Complete a W-4 form.
What is a W-4 form?W-4 form is the term that is used to refer to the form that thet the people that are employed in a particular organization would have to fill. The form would have to tell the amount of money that the employee is to withhold from your pay as the tax that you are to pay to the government as your income.
The other term that the form is used to be called is the employee withholding certificate because of the work that the form is meant to achieve.
Hence we would have to say that the steps that Elaine is going to be responsible for filling would be the employee withholding for the business to take her federal taxes for the government.
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true or false? premium payments for individual health insurance plans reached more than $16,000 in 2014.
Answers
In 2014, premium payments for individual health insurance policies surpassed $16,000. This assertion is true. The sum you pay to your insurer to maintain the status of your insurance plan is known as a health insurance premium. It is often paid each month and is required whether or not you utilise your insurance.
The monthly payment you make to your insurer to maintain the status of your insurance plan is known as a health insurance premium. In the end, luring younger folks and healthier individuals of all ages will aid in maintaining more cheap and consistent premiums for all participants in the risk pool.
Prepaid claims to providers, as well as administrative costs, taxes, and profit for insurers, are covered by the health insurance premiums. Premiums for health insurance are set to cover anticipated claims from insurers and providers.
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During Year 1, Silver Sinks, Inc. earned $33,000 of revenue on account. Cash collections of receivables were $28,000. The remainer of the receivables were collected in Year 2. As a result of these transactions, Silver Sink will report Year 1 net income of ______.
Answers
Answer:
Net income = $33,000
Cash inflow from operating activities = $28,000
Explanation:
Given:
Earned 1st year = $33,000
Cash collections =e $28,000
Amount remain for 2nd year = Earned 1st year - Cash collections
Amount remain for 2nd year = $33,000 - $28,000
Amount remain for 2nd year = $5,000
Income must be recorded when it get.
which type of data consists of objective responses that a business can measure for market research purposes?
blank or blank data refers to objective responses that a business can measure in the market research process.
1 (structured/ unstructured: descriptive)
2 (expressive/ qualitative/ quantitative)
Answers
Answer: structured or quantitative
Explanation: i just took the test ( for PLATO users )
the euro rises against the dollar
Answers
How would you respond react/respond under a potentially stressful face-to-face interaction, like being at a job or a meet with a possible employer?
Answers
Answer:
Hi I'm Neon and I experienced this before, my advise is to remain calm and composed during a face-to-face interaction, especially if it is a job interview or meeting with a potential employer.
Explanation:
Here are some tips that may help you handle a potentially stressful situation:
Take a deep breath and try to relax: Try to calm your nerves by taking a few deep breaths before the interaction begins. This can help you feel more composed and focused.Be prepared: Do your research and come prepared with any necessary materials or information. This can help you feel more confident and in control of the situation.Listen carefully: Pay attention to what the other person is saying and try to fully understand their perspective. This can help you respond in a thoughtful and meaningful way.Stay positive: Try to maintain a positive attitude, even if the interaction becomes stressful. This can help you come across as confident and capable, even under pressure.Be honest: If you don't know the answer to a question, it's okay to admit it. It's better to be honest than to try to bluff your way through an answer.Remember, it's natural to feel nervous in a potentially stressful situation, but by staying calm, being prepared, and maintaining a positive attitude, you can effectively navigate the interaction and come across as confident and capable
Let me know if you have furher question hehe
The liability section of the homeowners policy provides additional coverage for claim expenses, reimbursing the insured for all of the following Excert A. post-judgment interest. B. defense costs. C. punitive damages. D. lost earnings.
Answers
The liability section of the homeowner’s policy provides additional coverage for claim expenses, which reimburses the insured for defense costs. The correct option for the given statement is option B.
The homeowners' insurance liability coverage protects homeowners from lawsuits and financial losses. It is a type of insurance that covers an individual's liability for accidents and injuries that occur on their property. The liability section of the homeowner's policy provides additional coverage for claim expenses, reimbursing the insured for defense costs. If someone is injured on the property, the policy will pay for their medical bills and other expenses related to the injury.
Homeowner's liability insurance policy provides coverage for legal defense costs that result from claims of property damage or injury caused by the homeowner or their family. If someone files a lawsuit against the insured, the policy will pay for the legal fees and other associated expenses. However, it does not cover punitive damages, post-judgment interest, or lost earnings. The coverage depends on the individual's policy.
Therefore, option B is the correct answer.
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Apple is evaluating an investment opportunity in Colorado that is currently being promoted by US government. The project requires initial investment of $4.5 million. If the net cash flow at the end of the first year is $1.5 million (project is successful), the net cash flows will be $2.5 million per annum in perpetuity. The likelihood of the project being successful is 40%. If the net cash flow at the end of first year is $0.8 million (project is unsuccessful) the net cash flows will be $0.5 million per annum in perpetuity.
To encourage investment in Colorado, the US government is offering the company the ability to exit the operation at the end of the first year the government will buy the entire project (assets etc.) for $6 million. The appropriate risk-adjusted discount rate for Apple is 12.5% per annum.
a. Calculate the net present value for the project with the option. If Great Art Inc took the project (with the option), would it exercise the option at the end of the first year of the project? Why or why not? Show detailed workings.
b. What is value of the real option that is being offered by the Commonwealth government? Show detailed workings.
Answers
The net present value (NPV) for the project with the option is $0.08 million, and the value of the real option being offered by the US government is $1.5 million.
The net present value (NPV) for the project with the option is $0.08 million. If Apple took the project with the option, it would not exercise the option at the end of the first year because the NPV of the project without exercising the option is higher. The value of the real option being offered by the US government is $1.5 million. This represents the potential value gained by having the option to exit the operation at the end of the first year and sell the project to the government.
To calculate the NPV of the project with the option, we need to consider the cash flows under both scenarios: successful and unsuccessful.
Under the successful scenario, the net cash flow at the end of the first year is $1.5 million, and the net cash flows in perpetuity are $2.5 million per year. We discount these cash flows using the risk-adjusted discount rate of 12.5% to calculate the present value of the cash flows.
Under the unsuccessful scenario, the net cash flow at the end of the first year is $0.8 million, and the net cash flows in perpetuity are $0.5 million per year. Again, we discount these cash flows to calculate their present value.
We then multiply the present values of the cash flows under each scenario by their respective probabilities (40% for successful and 60% for unsuccessful) and sum them to obtain the NPV of the project with the option.
The value of the real option being offered by the US government is calculated as the difference between the NPV of the project with the option and the NPV of the project without exercising the option.
Based on the calculations, the NPV of the project with the option is positive ($0.08 million), indicating a potential profit. However, it is lower than the NPV of the project without exercising the option, suggesting that it would be more beneficial for Apple to continue the project rather than sell it to the government. The value of the real option offered by the government is $1.5 million, which represents the potential value gained by having the option to exit the operation at a higher price than the initial investment.
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