Answer: That class ain't for you vro.
Explanation:
Answer:
a. 6.7%
b. 12.0%
Explanation:
a. DDM
Dividende Discount Method is used to calculate the price of the stock using Dividend, rate of return and growth rate.
Return on equity = [ Dividend x ( 1 + growth rate ) / Price of stock ] + Growth Rate
Return on equity = [ $0.5 x ( 1 + 6% ) / $76 ] + 6%
Return on equity = [ $0.5 x ( 1.06 ) / $76 ] + 0.06
Return on equity = 6.7%
b. SML
Security Market line method uses calculates the cost of capital using following formula
Re = R
f + β ( Rm − R
f )
Rf = Risk free rate
β = stock beta
Rm = Market rate
Re =Expected rate
Re = 5.9% + 1.20 ( 11% - 5.9% )
Re = 12.02%
D. You are willing and able to buy the good at the given price
Answer:
A. $26,400
Explanation:
Prepaid insurance beginning balance $3,000
Add: Insurance paid during year <u>$25,800</u>
$28,800
Less: Prepaid insurance Ending balance <u>$2,400 </u>
Insurance expense <u>$26,400</u>