Answer:
The Boskin Commission adjustment caused the real wage growth between 1980, and 2016. Made a completely reverse direction or turn. Under the BLS data, real wage growth was -7.42% but under the Boskin adjusted data it was +36.28%.
Explanation:
I had this question and got it correct.
In the country of Cardonia, the natural rate of unemployment is 3.5% according to the Ministry of Economics. Last year there was an economic slow down where the actual rate of unemployment increased to 4.5%. Assuming that the unemployment percentages are accurate for Cardonia, what is the likely outcome for the economy of Cardonia
Answer: Cardonia’s economy will grow until real GDP is equal to potential real GDP and the unemployment rate equals 3.5%.
Explanation:
The natural rate of unemployment refers to the lowest unemployment rate in an economy whereby there is stability of inflation.
Based on the information given, if the unemployment percentages are accurate for Cardonia, then Cardonia’s economy will grow until real GDP is equal to potential real GDP and the unemployment rate equals 3.5%.
A manager needs to have summary sales information by product line available to her on a timely basis when purchasing decisions need to be made. The type of information system most likely to provide this type of information would be classified as a
Answer:
Management information
Explanation:
From the question we are informed about instance, whereby A manager needs to have summary sales information by product line available to her on a timely basis when purchasing decisions need to be made. In this case, The type of information system most likely to provide this type of information would be classified as a Management information. Management information system can be regarded as a an information system that is been used in decision-making as well as in the coordination, control and analysis or visualization of information in an organization.
Studing of management information systems encompass the people as well as the processes and technology as regards an organizational context.
Computing Present Values of Single Amounts and Annuities Refer to Tables 1 and 2 in Appendix A near the end of the book to compute the present value for each of the following amounts. Round answers to the nearest dollar. a. $130,000 received 10 years hence if the annual interest rate is: 1. 10% compounded annually. Answer 2. 10% compounded semiannually. Answer b. $3,000 received at the end of each year for the next eight years discounted at 8% compounded annually. $Answer c. $900 received at the end of each six months for the next 15 years if the interest rate is 10% per year compounded semiannually. $Answer d. $260,000 received 10 years hence discounted at 10% per year compounded annually. $Answer
How can higher data prices negatively affect other producers of goods and services
Answer:
Higher data prices increases the cost of end users to access the sites of the producers of goods and services leading to a reduction of number of potential customers and therefore, reduced online sales, while producers that have marketing networks for sale offline benefits from the redirection of the medium by those customers not willing to pay for the extra data cost to obtain such required goods and services to a nearby or local market
Explanation:
A company sells q ribbon winders per year at $p per\ribbon winder. The demand function for ribbon winders is given by P=300−0.02Q. Find the elasticity of demand when the price is $70 apiece. Will an increase in price lead to an increase in revenue
Answer:
0.30
Demand is inelastic and an increase in price would lead to an increase in total revenue
Explanation:
P=300−0.02Q
Make q the subject of the formula by dividing through by 0.02
50P = 15,000 - Q
Q = 15,000 - 50P
Differentiate the above equation
[tex]\frac{dp}{dq} = -50[/tex]
Determine the value of q when p is 70
Q = 15,000 - 50(70) = 11,500
Elasticity = [tex][\frac{p}{q} . \frac{dp}{dq} ][/tex]
[[tex]\frac{70}{11500} . -50][/tex] = 0.30
Demand is inelastic and an increase in price would lead to an increase in total revenue
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.
Price elasticity of demand = percentage change in quantity demanded / percentage change in price
If the absolute value of price elasticity is greater than one, it means demand is elastic. Elastic demand means that quantity demanded is sensitive to price changes.
Demand is inelastic if a small change in price has little or no effect on quantity demanded. The absolute value of elasticity would be less than one
Demand is unit elastic if a small change in price has an equal and proportionate effect on quantity demanded.
Infinitely elastic demand is perfectly elastic demand. Demand falls to zero when price increases
Perfectly inelastic demand is demand where there is no change in the quantity demanded regardless of changes in price.
Elasticity of demand is 0.30
Also, the demand is inelastic which means that an increase in price would lead to an increase revenue.
Given that;
P = 300−0.02Q
We can make Q, subject of the formula.
P = 300−0.02Q
Dividing through by 0.02 we'll have
P = 300−0.02Q
50P = 15,000 - Q
Q = 15,000 - 50P
Using differentials,
[tex]\frac{d}{p} = -50[/tex]
We can then determine the value of q when p is 70
Q = 15,000 - 50(70) = 11,500
Elasticity = [tex]\frac{70}{11,500} . - 50 = 0.30[/tex]
Therefore, Elasticity of demand is 0.30 . Increase in price would lead to an increase in revenue.
Read more at : https://brainly.com/question/24384825
A newly formed firm must decide on a plant location. There are two alternatives under consideration: locate near the major raw materials or locate near the major customers. Locating near the raw materials will result in lower fixed and variable costs than locating near the market, but the owners believe there would be a loss in sales volume because customers tend to favor local suppliers. Revenue per unit will be $185 in either case. Using the following information, determine which location would produce the greater profit.
Omaha Kansas City
Annual fixed costs ($ millions) $1.2 $1.4
Variable cost per unit $36 $47
Expected annual demand (units)8,000 12,000
Answer: Kansas City with a profit of $256,000
Explanation:
Omaha
Profit = Revenue - Fixed expenses - Variable expense
= Number of units * (Revenue - variable expenses) - Fixed cost
= 8,000 * (185 - 36) - 1,200,000
= -$8,000
Kansas City
= 12,000 * (185 - 47) - 1,400,000
= $256,000
Line Corporation's balance sheet showed the following amounts for their liability and stockholders' equity accounts: Current Liabilities, $5,000; Bonds Payable, $1,500; Lease Obligations, $2,000; and Deferred Income Taxes, $300. Total stockholders' equity was $6,000. The debt-to-equity ratio is:___________
Answer:
the debt-to-equity ratio is 1.47
Explanation:
The computation of the debt-to-equity ratio is shown below
= (Current liabilities + Bonds payable + Lease obligations + Deferred income taxes) ÷ Total stockholder's equity
= ($5,000 + $1,500 + $2,000 + $300) ÷ $6,000
= 1.47
Hence, the debt-to-equity ratio is 1.47
Therefore the same should be considered and relevant
The Williams Supply Company sells for $50 one product that it purchases for $20. Budgeted sales in total dollars for the year are $3,000,000. The sales information needed for preparing the July budget follows:
Month Sales Revenue
May $ 175,000
June 240,000
July 295,000
August 320,000
Account balances at July 1 include these:
Cash $ 125,000
Merchandise inventory 47,200
Accounts receivable (sales) 84,530
Accounts payable (purchases) 47,200
The company pays for one-half of its purchases in the month of purchase and the remainder in the following month. End-of-month inventory must be 40% of the budgeted sales in units for the next month. A 2% cash discount on sales is allowed if payment is made during the month of sale. Experience indicates that 60% of the billings will be collected during the month of sale, 25% in the following month, 12% in the second following month, and 3% will be uncollectible. Total budgeted selling and administrative expenses (excluding bad debts) for the fiscal year are estimated at $1,200,000, of which three-fourths is fixed expense (inclusive of a $36,000 annual depreciation charge). Fixed expenses are incurred evenly during the year. The other selling and administrative expenses vary with sales. Expenses are paid during the month incurred.
Part A
Part B
Part C
Part D
(a) Prepare a schedule of estimated cash collections for July.
(b) Prepare a schedule of estimated July cash payments for purchases. Hint: Start by doing a purchase budget.
(c) Prepare schedules of July selling and administrative expenses, separately identifying those requiring cash disbursements.
(d) Prepare a schedule of cash receipts over disbursements assuming no equipment purchases or loan payments.
Answer:
The Williams Supply Company
a. Estimated Cash Collections for July
58% sales month (60% -2%) $171,100 ($295,000 * 58%) July
25% ffg month 60,000 ($240,000 * 25%) June
12% second month 21,000 ($175,000 * 12%) May
Estimated cash collections = $252,100
b. Estimated July Cash Payments for Purchases:
July
Cost of purchases $122,000
50% purchase month 61,000
50% ffg month 47,200
Total payment for purchases $108,200
c. July Selling and Administrative Expenses:
Monthly fixed expenses $72,000
Variable expenses ($5 * 5,900) 29,500
Total selling and admin expenses $101,500
d. Cash Receipts Over Disbursements for July:
Beginning cash balance $125,000
Total cash receipts 252,100
Total cash available $377,100
Cash Disbursements:
Purchases $108,200
Selling and Admin. 101,500
Total cash disbursements $209,700
Cash balance $167,400
Explanation:
a) Data and Calculations:
Selling price of product = $50 per unit
Purchase cost of product = $20 per unit
Total budgeted sales for the year = $3,000,000
Total budgeted sales for the year (units) = 60,000 units
Month Sales Revenue Unit Sales
May $175,000 3,500 ($175,000/$50)
June 240,000 4,800 ($240,000/$50)
July 295,000 5,900 ($295,000/$50)
August 320,000 6,400 ($320,000/$50)
July 1 Account Balances:
Cash = $125,000
Merchandise inventory = $47,200
Accounts receivable (sales) = $84,530
Accounts payable (purchases) = $47,200
Payment of Purchases:
50% purchase month
50% ffg month
Cash collections from sales:
58% sales month (60% -2%)
25% ffg month
12% second month
Ending inventory = 40% of the budgeted sales in units in the next month
Total budgeted selling and administrative expenses (excluding bad debts) = $1,200,000
Fixed expense = $864,000 ($1,200,000 * 3/4) - $36,000
Monthly fixed expenses = $72,000 ($864,000/12)
Variable selling expenses = $300,000 ($1,200,000 - $900,000)
Variable selling expenses per unit = $5 ($300,000/60,000)
Purchases Budget
June July
Ending inventory 2,360 2,560
Sales 4,800 5,900
Units available for sale 7,160 8,460
Beginning inventory 1,920 2,360
Purchases 5,240 6,100
Cost of purchases $104,800 $122,000 (6,100 * $20)
One disadvantage to terrorists of using radiological materials in weapons is: Select one: a. numerous difficult steps to assemble device. b. economic impact on affected areas. c. lethal effects depending on type of radiation source. d. the majority of jurisdictions within the United States are unprepared for any type of large incident involving radiological material.
Answer: a. numerous difficult steps to assemble device.
Explanation:
Radiological materials are quite cumbersome to assemble and require rare materials whose sale are intensely watched by various intelligence agencies in the world. Coupled with that is the need for very skilled scientists in order to assemble the device.
All these hurdles make it so that terrorists are not able to assemble radiological devices easily which is a good thing because if they could, it would have been used to devastating effect on many parts of the world by now.
Muthu had 4 times as many stamps as sangeetha. After Muthu gave 12 stamps to Sangeetha, they have an equal number of stamps. How many stamps does Sangeetha now have?
Answer:
I think you should add them and than subtract
The principle of establishing responsibility does not include Group of answer choices one person being responsible for one task. authorization of transactions. independent internal verification. approval of transactions.
Answer:
independent internal verification.
Explanation:
Internal controls can be defined as the policies, set of rules, and procedures implemented or put in place by an organization to protect its assets, boost efficiency, enhance financial accountability, enforce adherence to company policies and prevent fraudulent behaviors among the employees.
The main purpose of internal controls is to guarantee that loss is eliminated by ensuring that there is an accurate and reliable accounting system.
One of the essential characteristics of internal control is the principle of establishing responsibility such as assigning responsibility to specific individuals. An internal control is considered to be most effective when an individual is solely responsible for a specific accounting task.
Hence, the principle of establishing responsibility include the following;
I. Only one person or an individual is being responsible for a task.
II. An individual is solely responsible for the authorization of transactions.
III. An individual is solely responsible for the approval of transactions.
During the year, she spent $2,500 on and began working on a law degree in night school. Her law school expenses were $4,200 for tuition and $450 for books (which are not a requirement for enrollment in the course). Assuming no reimbursement, how much of these expenses can Janet deduct
Complete Question:
Janet is currently employed at an accounting firm. During the year (2021), she spent $2,500 on a CPA review course and began working on a law degree in night school. Her law school expenses were $4,200 for tuition and $450 for books (which are not a requirement for enrollment in the course). Assuming no reimbursement, how much of these expenses can Janet deduct?
Answer:
Janet
Assuming no reimbursement by the accounting firm, Janet can deduct:
= $6,700
Explanation:
a) Data and Calculations:
Amount spent on CPA review course = $2,500
Law school expenses:
Tuition = $4,200
Books = $450
Total expenses by Janet = $7,150
Books not required for enrollment = $450
Qualified deductible expenses = $6,700
b) Therefore, Janet cannot deduct the whole $7,150 expenses that she incurred during the year. But she can deduct up to $6,700. The expense for the books is not qualified because the books are not required for her enrollment or attendance at the law school.
The process mapping is a
____ diagram.
Answer:
I hope u understand and thank you for your questions
a schedule or curve that shows the various amounts of a product that consumers are willing and able to purchase at each of a series of possible prices during a specified period of time *
Answer: Demand is what the name suggest it is the demand or need for material or merchandise. Supply is the ability to meet the demend or the difinition you just described. Supply and deman is what makes things that should be cheap expensive and the expensive things cheap. [tex]\color{yellow}{}[/tex]
Outsourcing: Question 19 options: Transfers traditional internal activities to outside vendors. Utilizes the efficiency which comes with generalization. Reduces the chances that the outsourcing firm can focus on its key success factors. None of the above are true of outsourcing. All of the above are true of outsourcing.
Answer:
Transfers traditional internal activities to outside vendors.
Utilizes the efficiency which comes with generalization
Explanation:
Outsourcing can be regarded as a business practice which involves hiring a party from outside of the company so that the party can perform particular services as well as creation of goods which traditionally are been performed in-house by the employees and staff of the own company.Outsourcing helps in cost-cutting measure
It should be noted that Outsourcing ;
✓Transfers traditional internal activities to outside vendors.
✓Utilizes the efficiency which comes with generalization.
Selected operating data for two divisions of Outback Brewing, Ltd., of Australia are given below: Division Queensland New South Wales Sales $ 1,144,000 $ 2,220,000 Average operating assets $ 520,000 $ 600,000 Net operating income $ 125,840 $ 177,600 Property, plant, and equipment (net) $ 252,000 $ 202,000 Required: 1. Compute the rate of return for each division using the return on investment (ROI) formula stated in terms of margin and turnover. 2. Which divisional manager seems to be doing the better job?
Answer:
Outback Brewing, Ltd., of Australia
Queensland New South Wales
1. Rate of return 5% 2.16%
2. Based on the computed Rate of Return, Division Queensland seems to be doing a better job than New South Wales
Explanation:
a) Data and Calculations:
Queensland New South Wales
Sales $ 1,144,000 $ 2,220,000 Average operating assets $ 520,000 $ 600,000
Net operating income $ 125,840 $ 177,600
Property, plant, and equipment (net) $ 252,000 $ 202,000
Sales margin = 11% 8%
Capital turnover ratio = 2.2 3.7
Return on investment (ROI) = 5% 2.16%
Sales margin = Net operating income/Sales * 100
Capital turnover ratio = Sales/Average operating assets
ROI = Sales margins divided by the firm's capital turnover ratio
1) What are the three primary determinants of behavior in organizations?
Answer:
The three primary determinants of behavior in organizations are employee dynamics, available resources and work environments.
A company claims that 10% of the users of a certain allergy drug experience drowsiness. In clinical studies of this allergy drug, 81 of the 900 subjects experienced drowsiness
a. We want to test their claim and find out whether the actual percentage is not 10%. State the appropriate null and hypotheses.
b. Is there enough evidence at the 5% significance level to infer that the competitor is correct?
c. Compute the p-value of the test.
d. Construct a 95% confidence interval estimate of the population proportion of the users of this allergy drug who experience drowsiness.
e. Explain how to use this confidence interval to test the hypotheses.
Answer:
Answer is D
Explanation:
d. Construct a 95% confidence interval estimate of the population proportion of the users of this allergy drug who experience drowsiness.
How can indirect taxes affect consumer spending
Answer:
Indirect tax increases will push up prices, decrease consumption and hence reduce the effects of negative externalities such as damage to the environment.
Indirect taxes are placed on goods and services that raise the price for the consumer to pay more for the item.
Due to an increase in final prices at which goods and services are passed on to end-users, the consumers would have to settle for lesser quantities. As a result, the consumer would now be able to afford the reduced portion of goods or services with reduced resources than he would have been able to.
Beard Company sells a product for $15 per unit. The variable cost is $10 per unit, and fixed costs are $1,750,000. Determine (a) the break-even point in sales units and (b) the sales units required for the company to achieve a target profit of $400,000.
Answer:
a. Contribution margin = Selling price - Variable cost per unit
Contribution margin = $15 - $10
Contribution margin = $5 per unit
Break even point in units = Fixed cost / Contribution margin
Break even point in units = $1,750,000 / $5
Break even point in units = 350,000 units
b. Required sale = Fixed cost + Target profit / Contribution margin
Required sale = $1,750,000 + $400,000 / $5
Required sale = $2,150,000 / $5
Required sale = 430,000 units
Here are incomplete financial statements for Cullumber Company. Calculate the missing amounts.
CULLUMBER COMPANY
Balance Sheet
Assets
Cash $ 14,000 Inventory 17,000 Buildings 38,000 Total assets $69,000 Liabilities and Stockholders' Equity Liabilities Accounts payable $ 5,600 Stockholders' Equity Common stock enter a dollar amount
(a) Retained earnings enter a dollar amount
(b) Total liabilities and stockholders' equity $69,000 CULLUMBER COMPANY Income Statement Revenues $85,400 Cost of goods sold enter a dollar amount
(c) Salaries and wages expense 10,270 Net income $enter a dollar amount
(d) CULLUMBER COMPANY Retained Earnings Statement Beginning retained earnings $19,000 Add: Net income enter a dollar amount
(e) Less: Dividends 4,770 Ending retained earnings $34,000
Answer:
(a) Common Stock = $29,400. (b) Retained earnings = $34,000, (c) Cost of goods sold = $55,360, (d) Net Income = $19,770, (e) Net Income =$19,770
Explanation:
Note: See organized question as attached below to aid understanding
Net income = Ending retained earnings + Dividends - Beginning retained earnings
Net income = $34,000 + $4,770 - $19,000
Net income = $19,770
Net income = Revenue - Cost of goods sold - Salaries and wages expense
$19,770 = $85,400 - Cost of goods sold - $10,270
Cost of goods sold = $85,400 - $19,770 - $10,270
Cost of goods sold = $55,360
Total liabilities and stockholders equity = Accounts payable + Common stock + Retained earnings
$69,000 = $5,600 + Common stock + $34,000
Common stock = $69,000 - $5,600 - $34,000
Common stock = $29,400
Missing amounts :
Common Stock = $29,400
Retained earnings = $34,000,
Cost of goods sold = $55,360
Net Income = $19,770
Net Income = $19,770
Net income
= Ending retained earnings + Dividends - Beginning retained earnings
= $34,000 + $4,770 - $19,000
= $19,770
Net income
= Revenue - Cost of goods sold - Salaries and wages expense
$19,770 = $85,400 - Cost of goods sold - $10,270
Cost of goods sold
= $85,400 - $19,770 - $10,270
= $55,360
Total liabilities and stockholders equity
= Accounts payable + Common stock + Retained earnings
$69,000 = $5,600 + Common stock + $34,000
= $69,000 - $5,600 - $34,000
= $29,400
Learn more about calculation of retained earnings here: https://brainly.com/question/5709809
A _________ is not a specific security but an arrangement whereby a bank or security dealer sells specific marketable securities to a firm and agrees to repurchase the securities in the future.
A [tex]\sf\purple{repurchase \:agreement}[/tex] is not a specific security but an arrangement whereby a bank or security dealer sells specific marketable securities to a firm and agrees to repurchase the securities in the future.
[tex]\large\mathfrak{{\pmb{\underline{\orange{Happy\:learning }}{\orange{!}}}}}[/tex]
Economists experience difficulties in accurately measuring income inequality because of which of the following? Choose one or more: A. do-it-yourself production of goods and services (such as growing own food or making own clothing) that are not bought or sold in the market B. Measurements tend to use "before tax" income, not "after tax" income (disposable income), which is the income people actually have available to purchase goods and services. C. The Gini index calculation discriminates against the poor in developed economies. D. in-kind transfers where goods and services are given
Answer:
Economists experience difficulties in accurately measuring income inequality because of the following:
A. do-it-yourself production of goods and services (such as growing own food or making own clothing) that are not bought or sold in the market
Explanation:
With do-it-yourself production of goods and services, it is very difficult to measure income inequality. Income is measured as the value that is exchanged for goods and services in the marketplace, that is, by the forces of demand and supply. These marketplace forces cannot be objectively measured when goods and services are produced and consumed by the same person.
Reason why the Economists do encounter some difficulty in the process of measuring income inequality is as result of A :do-it-yourself production of goods and services (such as growing own food or making own clothing) that are not bought or sold in the market
Income inequality can be regarded as a way to measure unevenly income distribution among population. When the distribution is less equal, then the income inequality will be high, however some difficulties are been faced by Economist in taking this measurement such as situation whereby people make the goods they need by themselves instead of getting it from market.Therefore, option A is correct.
Learn more at:
https://brainly.com/question/12097372?referrer=searchResults
Blue Spruce Corp. gathered the following reconciling information in preparing its June bank reconciliation: Cash balance per books, 6/30 $14600 Deposits in transit 1000 Notes receivable and interest collected by bank 2580 Bank charge for check printing 85 Outstanding checks 5200 NSF check 490 The adjusted cash balance per books on June 30 is:_________.
a. $17585.
b. $17605.
c. $16605.
d. $17180.
Answer:
c. $16605
Explanation:
Calculation to determine what The adjusted cash balance per books on June 30 is:
Using this formula
Adjusted Cash Balance=Cash balance + Notes receivable - Check Printing - NSF Check
Let plug in the formula
Adjusted Cash Balance=$14600 + $2,580 - $85 - $490
Adjusted Cash Balance= $16605
Therefore The adjusted cash balance per books on June 30 is:$16605
In 2007, Gillette saw an opportunity to capture the market of 500 million Indians who used double edge razors with no protection between the blade and the skin. Gillette sought to make an inexpensive and safe disposable razor. Their first product, The Vector failed because it always clogs. What do you think went wrong
Answer:
Gillette in India
The failure of the Vector was caused by the fact that Indian men have longer and thicker hair, which the lack of earlier research in the targeted demographic segment did not discover.
Explanation:
Since Indian men have longer and thicker hair than the local consumers of Gillette's razor products in America, an earlier research would have uncovered the fact. Thereafter, the discovery would have been incorporated into the design and production of Vector for the Indian market. No wonder, with its Mach 3 Turbo razor, Gillette overcame its initial inertia and handicap and made a success of the razor business in India.
13. Social Entrepreneurs identify social needs such as
a. The arts and education
c. Shipping and operations
b. Internet and technology
d. Profit and loss
Help
Acme, Inc., incurs the following costs during May:
Sales expense $ 12,100 Administrative expense $ 22,100
Direct labor 26,600 Plant depreciation 6,800
Factory supplies 3,100 Indirect labor 8,600
Advertising 3,400 Utilities 10,600
Raw material used 18,600
80% of this amount relates to the factory.
Required:
Calculate Acme�s total manufacturing costs for May.
Answer:
Particulars Amount
Raw material used $18,600
Add: Direct labor $26,600
Overhead costs
Factory supplies $3,100
Plant depreciation $6,800
Indirect labor $8,600
Utilities ($10,600*80%) $8,480
Total overhead cost $26,980
Total manufacturing costs $72,180
After a project has been accepted, the decision to lease or buy is determined by the present value of the lease's cash flows when discounted at the project's risk-adjusted cost of capital. Group of answer choices True False
Answer:
True
Explanation:
The present value of the lease's periodic cash flows using the project's risk-adjusted cost of capital discount rate is determined and recorded as the Rights to Use Asset with a corresponding Lease Liability of the same amount, if the lease option is taken. If the buy option is taken, the cost of purchase and installation is recorded as the asset's value with the corresponding credit to the Payable or Cash account. The major difference is that the lessee enjoys greater flexibility in abandoning the project with leased equipment than when equipment is bought and owned.
Shelton Enterprises is expecting tremendous growth from its newest boutique store. Next year the store is expected to bring in net cash flows of $675,000. The company expects its earnings to grow annually at a rate of 13 percent for the next 15 years. What is the present value of this growing annuity if the firm uses a discount rate of 18 percent on its investments? (Round to the nearest dollar.)
A. $5,478,320
B. $6,448,519
C. $6,750,000
D. $7,115,449
Answer:
B. $6,448,519
Explanation:
The computation of the present value of this growing annuity is given below:
PVA = [Cash flow at year 1 ÷ (interest rate - growth rate)] × {1 - [(1 + growth rate) ÷ (1 + interest rate)^number of years}
= [$675,000 ÷ (0.18 - 0.13)] × [1 - (1.13 ÷ 1.18)^15]
= $6,448,519
Hence, the correct option is b.
A stock has an expected return of 11.85 percent, its beta is 1.24, and the expected return on the market is 10.2 percent. What must the risk-free rate be?
Answer:
3.325%
Explanation:
The computation of the risk free rate of return is shown below:
As we know that
Expected rate of return = risk free rate of return + beta × (market rate of return - risk free rate of return)
11.85% = Risk Free Rate + ( 10.2% - Risk Free Rate) × 1.24
11.85% = Risk Free Rate + 12.648% - 1.24 × Risk Free Rate
0.24 × Risk Free Rate = 12.648 % - 11.85%
Risk Free Rate= (12.648 % - 11.85%) ÷ 0.24
= 3.325%