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pashok25 [27]
2 years ago
5

Trucks R' Us has a market capitalization of $142 million, $78 billion in BB rated debt, and $10 billion in cash. If Trucks R' Us

' equity beta is 1.68, then their underlying asset beta is closest to:
Business
1 answer:
Sati [7]2 years ago
6 0

Answer:

Their underlying asset beta is closest to is 1.08

Explanation:

According to the given data we have the following:

Debt is given as $78 billion

Equity is given as $142 billion

equity beta given as 1.68

Therefore, in order to calculate the underlying asset beta we would have to use the formula of the the equity beta for a levered firm as follows:

betaE =beta A [1 + (Debt / Equity)]

1.68 = \beta A [1 + ($78 B/ $142 B)]

1.68 = \beta A [1 + 0.5493]

betaA = 1.68 / 1.5493

betaA = 1.08

Their underlying asset beta is closest to is 1.08

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The Technology department at Watkins Transit has a budgeted annual cost of $65,000. The department has a capacity to handle 250
Mrrafil [7]

Answer: $14,625

Explanation:

Based on the information given, if practical capacity is used to allocate cost, the cost that is allocated to shipping will be:

= Budgeted annual cost/200 × Number of shipping work stations

= 65000/200 × 45

= $14,625

3 0
2 years ago
Patti sells a painting that has a fair market value of $9,000 to James for $6,000. Which of the following statements about the t
Ahat [919]

Answer:

<u>II and III</u>

Explanation:

According to the IRS tax guidelines this two scenario matches them correctly;

The statement that James is Patti's brother, <em>would imply</em> that he (James) would not recognize any income from the sale to be deducted as tax.

Second, assuming Patti is an art dealer and she sold the painting to James because she needed cash quickly, James would not recognize any imputed income from the sale.

3 0
2 years ago
Assume that speculators purchased a futures contract at the beginning of the year. If the price of a security represented by the
tangare [24]

Answer:

If the price of a security represented by the futures contract <u>INCREASED</u> over the year, then these speculators would likely have purchased the futures contract for <u>LESS</u> than they can sell it for.

Explanation:

The whole idea behind securities trading is to buy cheap and sell at a higher price. The term speculator usually refers to an investor that only trades with securities to be able to make short term gains, they do not invest money as long term investments. There is nothing wrong with them, it a risky job that yields high gains or extreme losses.

3 0
2 years ago
You have two choices for how you are going to spend Saturday evening. You can go to the pub with your friends, which will cost y
icang [17]

Answer:

b. The economic cost of going to the pub is £40.

Explanation:

The correct option is - b. The economic cost of going to the pub is £40.

Reason -

Economic cost = Cost actually incurred to choose an option + opportunity cost

Now,

We know that

Opportunity cost is the value of next best alternative forgone.

Now,

Net benefits while the person going to Pub = 50 - 30 = £20

Net benefits while the person going to Theatre = 60 - 50 = £10

So,

The opportunity cost = £20 - £10 = £10

∴ we get

Economic cost of going to the Pub= £30 + £10 = £40

3 0
2 years ago
Joe Kwo recognizes that the cloud offers both opportunities and risks. How would a move to the cloud make it easier and/or more
White raven [17]

Answer: The movement to the cloud would make it simple for Fintech to give large volumes of selected data to the firm's clients

Explanation:

Cloud computing is the storing and accessing of programs and data over the internet instead of using the computer's hard drive.

The movement to the cloud would make it simple for Fintech to give large volumes of selected data to the firm's clients because the clients will get helpful insight from their data by using cloud.

Another benefit is that Fintech could rent a service rather than making huge up-front investments in software and hardware. This would save Fintech some funds and make the firm more profitable.

3 0
2 years ago
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