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Yakvenalex [24]
2 years ago
6

Linke Motors has a beta of 1.30, the T-bill rate is 3.00%, and the T-bond rate is 6.5%. The annual return on the stock market du

ring the past 3 years was 15.00%, but investors expect the annual future stock market return to be 10.00%. Based on the SML, what is the firm's required return? Do not round your intermediate calculations. a. 12.71% b. 10.50% c. 11.05% d. 13.48% e. 10.17%
Business
1 answer:
elena-14-01-66 [18.8K]2 years ago
8 0

Answer:

c. 11.05%

Explanation:

The computation of firm's required return is shown below:-

First we need to find out the Market Risk Premium for computing the firm's required return.

Using CAPM, we calculate Market Risk Premium

Expected Future Market Rate of Return = Risk Free Rate on T-Bond + Beta of the Market × Market Risk Premium

10% = 6.5% + 1 × Market Risk Premium

Market Risk Premium = (10% - 6.5%) ÷ 1

= 3.5%

Required Rate of Return = Risk Free Rate + Beta of the Stock × Market Risk Premium

= 6.5% + (1 + 3.00%) × 3.5%

= 6.5% + 1.30 × 3.5%

= 11.05%

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Answer:

Edge Cities

Explanation:

  • Edge City is a small city generate in the U.s for a concentration of industry, shopping, and enjoyment on the outside of a conventional city center or city center in what was previously a social housing or rural suburb.
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2 years ago
Solar Hydro manufactures a revolutionary aeration system that combines coarse and fine bubble aeration components. This year (ye
Ierofanga [76]

Answer:

$7,986

Explanation:

To calculate the equivalent annual cost for 5 year period at an interest rate of 10% per year we need to go through some minor calculations first.

DATA

Cost in first year (A) = $10,000

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Interest rate = 10%

Time period = 5 years

Solution

EAC = A - G (A/G, i, n)

EAC = $9,000 - $560(A/G, 10%, 5)

EAC = $9,000 - ($560 * 1.8101)

EAC = $9,000 - $1,013.656

EAC = $7,986

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2 years ago
One of the labels in Sarah's spreadsheet does not fit inside cell A3. Sarah should _____.
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<span>C. Making the column wider by dragging between the A and the B to the right</span>
3 0
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Members of the team know their boundaries and ask for help before the resuscitation attempt worsens. Match this statement with t
ira [324]

Answer:

D. constructive intervention

Explanation:

constructive intervention is the act where the member or members of a team speaks up to question or correct the action of their leader if they feel the action is not appropriate.

this option is the best match for the question.

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Lott Company uses a job order cost system and applies overhead to production on the basis of direct labor costs. On January 1,20
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Answer:

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Explanation:

Giving the following information:

Calculate the predetermined overhead rate for 2020, assuming Lott Company estimates total manufacturing overhead costs of $ 882,000, direct labor costs of $735,000, and direct labor hours of 21,000 for the year.

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2 years ago
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