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ycow [4]
2 years ago
13

Nagel Equipment has a beta of 0.88 and an expected dividend growth rate of 4.00% per year. The T-bill rate is 4.00%, and the T-b

ond rate is 5.25%. The annual return on the stock market during the past 4 years was 10.25%. Investors expect the average annual future return on the market to be 14.75%. Using the SML, what is the firm's required rate of return? Do not round your intermediate calculations. a. 11.57% b. 14.70% c. 12.25% d. 12.11% e. 13.61%
Business
1 answer:
Luda [366]2 years ago
7 0

Answer:

Option (e) is correct.

Explanation:

Given that,

Beta = 0.88

Expected dividend growth rate = 4.00% per year

T-bond rate = 5.25% (The treasury bonds are always the risk free rate)

Average annual future return on the market = 14.75%

Required rate of return:

= Risk free rate + Beta × (Market rate - Risk free rate)

= 5.25 + 0.88 × (14.75 - 5.25)

= 5.25 + 0.88 × 9.5

= 5.25 + 8.36

= 13.61%

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Match the scenarios to the type of income earned based on the categories of the income approach.
Dmitry [639]

Answer:

1. Compensation of employees

Mos Quito works as an exterminator for Bugs B Dead, Inc

2. Corporate Profits

Noah Count,Inc ., recently paid out dividends to stakeholders.

3. Proprietor's income

Exterminator plus is an owner owned business.

4. Miscellaneous Adjustments

Noah Count Inc collects $2000 in sales taxes every month

5. Net Interest

Bugs B Dead, Inc., pays it's mortgage promptly every month

6. Rental income

Anitha house bought a duplex for a additional income

Explanation:

1) Compensation of employees is the total remuneration, in cash or in kind, payable by an employer to an employee in return for work done by the employee during an accounting period. In this case Mos Quito is an employee.

2) Corporate profits also called net profit is a measure of financial performance that indicates earnings after expenses and other deductions made.

3) Proprietor's income is the excess of revenue over explicit production cost of owner-operated businesses and includes payments for labor, capital, land and entrepreneurship.

4) Miscellaneous Adjustments is used to make adjustments without having to consider amount limitations.

5) Net interest is the difference between the income a bank earns from interest and the expenses (including interest payments) associated with its liabilities.

6) Rental income is the amount of money collected by a landlord from tenants using a particular space or property

8 0
2 years ago
Ms. Langley is 30 years old and has begun a retirement plan that permits he r to place monthly amounts of $400 into a retirement
elena-14-01-66 [18.8K]

Answer:

Instructions are listed below

Explanation:

Giving the following information:

Ms. Langley is 30 years old and has begun a retirement plan that permits her to place monthly amounts of $400 into a retirement vehicle, beginning one month from now, for 30 consecutive years.

When Ms. Langley reaches her retirement at age 60, she expects to live for 25 more years. The interest rate is 6%.

First, we need to calculate the amount of money that she will have at age 60, using the following formula.

FV= {A*[(1+i)^n-1]}/i

A= monthly deposit= 400

n= 30*12= 360

i= 0.06/12= 0.005

FV= {400[(1.005^360)-1]}/0.005= $401,806.02

Months= 25years*12= 300 months

Monthly= 401,806.02/300= $1,339.35

4 0
2 years ago
Jarrod receives a scholarship of $28,000 from East State University to be used to pursue a bachelor's degree. He spends $16,800
Anton [14]

Answer:

$18,200

Explanation:

Calculation to determine what Jarrod may exclude from his gross income.

Using this formula

Gross income=Tuition+Books and supplies

Let plug in the formula

Gross income= $16,800 + $1,400

Gross income=$18,200

Therefore Jarrod may exclude $18,200 from his gross income.

8 0
2 years ago
Mobility Partners makes wheelchairs and other assistive devices. For years it has made the rear wheel assembly for its wheelchai
Cloud [144]

Answer:

Considering the allocate fixed cost, it would not be a good option.

It will generate a financial disadvantage of 22,950

Explanation:

\left[\begin{array}{cccc}&produce&buy&Differential\\Purchase&&282,600&-282,600\\Variable Cost&270,000&&270,000\\Fixed Cost&68,400&32,850&-35,550\\Total Cost&338,400&315,450&-22,950\\\end{array}\right]

Fixed overhead; 38 x 1800 = 68,400

There is a portion of 35,550 fixed cost which is tracable to the real wheel assembly line thus, will be eliminated.

But 32,850 would not.

Considering this, it would not be a good option to stop the assembly line and purchase the component

7 0
2 years ago
Gia Company has the following information​ available: Cash pledged as collateral $ 2 comma 000 comma 000 U.S. Treasury bill due
stepan [7]

Answer:

$4,400,000

Explanation:

Cash Pledged                              $2,000,000

Treasury bill due in one month  $2,000,000

Cash in checking account           $400,000

Cash and Cash Equivalents         $4,400,000

Please note that treasury bill due after 90 days or maturing after 90 days are not considered cash equivalents.

6 0
2 years ago
Read 2 more answers
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