Seneff Corporation uses the following activity rates from its activity-based costing system to assign overhead costs to products
1 answer:
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Answer:
risk free rate of return is = 11.37 %
Explanation:
given data
K expected rate of return = 13%
K standard deviation = 19% = 0.19
L expected rate of return = 10%
L standard deviation = 16% = 0.16
to find out
risk-free portfolio rate of return
solution
first we find here weight of each portfolio
weight of K = ..................1
weight of K =
weight of K = 0.4571 = 45.71%
and
weight of L = 1 - 0.4571
weight of L = 0.5428 = 54.28 %
so that
risk free rate will be here
risk free rate = ( weight of K × K expected rate of return ) + ( weight of L + L expected rate of return ) ..........................2
risk free rate = ( 45.71 % × 13 % ) + ( 54.28 % + 10% )
risk free rate = 11.37 %
Answer:
- <u><em>No, he will not have enough money to buy his delivery truck at the end of 6 years.</em></u>
Explanation:
To find how much<em> money Earl Mille</em>r, <em>owner of Papa Gino's franchise</em>, will have in <em>6 years</em>, you must calculate the value of the <em>$20,000</em> that he <em>invests</em> at the <em>5% compounded semiannually:</em>
- Semianual compounded interest: 5% / 2 = 0.05/2 = 0.025
Equation:
Where r/n was already calculated: r/n = 0.05/2 = 0.025; and t is the number of years: 6.
Hence the value of the money invested is less than the value of the truck, and <em>he will not have enough money to buy his delivery truck at the end of 6 years.</em>