BUSINESS COLLEGE

The risk premium for exposure to aluminum commodity prices is 4%, and the firm has a beta relative to aluminum commodity prices of .6. The risk premium for exposureto GDP changes is 6%, and the firm has a beta relative to GDP of 1.2. If the risk-free rate is 4%, what is the expected return on this stock?
A.14.4 percent
B.10.0 percent
C.13.6 percent
D.11.5 percent Please show work

Answers

Answer 1
Answer:

Answer:

C.13.6 percent

Explanation:

         GDP   Market   STOCK      

ER    7,2% 2,4% 13,6% Expected Return of Investment    Rf                                  4,00% Risk-Free Rate    

Bi      1,2     0,6     1,0     Beta of the Investment    

(Erm-Rf) 6,00% 4,00% 9,60% Market Risk Premium    

It's necessary to calculate how much impact each item has with the corresponding Beta in the stock  

Then, to know the impact of exposure to the Aluminum market, we have to multiply the risk premium of 4% by the beta of 0,6  

Then, to know the impact of the exposure to GDP, we do the same procedure, we multiply the risk premium of GDP by the beta of 1,2.    

With these calculations we reach how much of the return on this stock corresponds to the market and then we add 4% of risk free.  

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You are considering acquiring a common stock that you would like to hold for one year. You expect to receive both $2.50 in dividends and $28 from the sale of the stock at the end of the year. The maximum price you would pay for the stock today is ________ if you wanted to earn a 15% return. Group of answer choices $24.11 $27.50 $23.91 $26.52 None of the options are correct.

A company is considering investing in a project that costs $300,000. The company uses straight-line depreciation and estimates that the project has a useful life of 10 years with no salvage value. This project is expected to produce NET INCOME of $42,000 each year. Assuming a minimum rate of return of 10%, indicate the NET PRESENT VALUE of this project. a. $41,928
b. $258,072
c. $120,000
d. $142,409

Answers

Answer:

NPV = $-41,928.18

Explanation:

Net present value is the present value of after tax cash flows from an investment less the amount invested.

NPV can be calculated using a financial calculator:

Cash flow in year 0 = $-300,000

Cash flow each year from year 1 to 10 = $42,000

I = 10%

NPV = $-41,928.18

To find the NPV using a financial calacutor:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.

3. Press compute

I hope my answer helps you

Answer:

b. $258,072

Explanation:

PERIOD              CASH FLOW                   NET PRESENT VALUE

Year 1                       $42,000                         (42000)/((1 + 0.10)^(1)) = 38181.82

Year 2                      $42,000                         (42000)/((1 + 0.10)^(2)) = 34710.74

Year 3                      $42,000                         (42000)/((1 + 0.10)^(3)) = 31555.22

Year 4                      $42,000                         (42000)/((1 + 0.10)^(4)) = 28686.57

Year 5                      $42,000                         (42000)/((1 + 0.10)^(5)) = 26078.70

Year 6                      $42,000                         (42000)/((1 + 0.10)^(6)) = 23707.91

Year 7                      $42,000                         (42000)/((1 + 0.10)^(7)) = 21552.64

Year 8                      $42,000                         (42000)/((1 + 0.10)^(8)) = 19593.31

Year 9                      $42,000                         (42000)/((1 + 0.10)^(9)) = 17812.10

Year 10                     $42,000                        (42000)/((1 + 0.10)^(10)) = 16192.82

Total                                                                          $258,071.83  

Which financial statement matches asset increases from operating a business with asset decreases from operating the business?Statement of changes in equity.Balance sheet.Statement of cash flows.Income statement.

Answers

Answer:

Income statement

Explanation:

Statement of change in equity: It records beginning balance of equity, ending balance of equity, net income or loss, dividend paid if any.

Balance sheet: It records the assets and the liabilities side of the balance sheet which equals to

Total assets = Total liabilities + Stockholder equity

Statement of cash flows: It records three types of activities:

1. Operating activities: It includes those transactions which affect the working capital, and it records transactions of cash receipts and cash payments.

2. Investing activities: It records those activities which include purchase and sale of the fixed assets

3. Financing activities: It records those activities which affect the long term liability and shareholder equity balance.  

Income statement: It records all income and expenses of a particular period.

In the given question, the increase in assets records under the revenue part whereas if the asset decreases, it records under expenses part of the income statement.  

Identify which of the objectives of business writing is not being met in the following message. I see that there appears to be an absolutely unfamiliar potential client requesting to converse with you in the upcoming afternoon interval. Would you prefer that I reject his request because you are already experiencing an overload of professional work demands?

Answers

Explanation:

There is no clear purposeful in the business writing above.

For it to be a message that effectively communicates the main information that you want to transmit, it is important that the message is written in the most objective and accurate way possible, so that there is no communication noise and so that the message reaches the receiver and the message is understood. central purpose of the message effectively.

Assume a firm has earnings before depreciation and taxes of $620,000 and depreciation of $320,000. a. If it is in a 35 percent tax bracket, compute its cash flow. b. If it is in a 20 percent tax bracket, compute its cash flow.

Answers

Answer:

The correct answer for option (a) is $515,000 and for option (b) is $560,000.

Explanation:

According to the scenario, the given data are as follows:

Earnings before depreciation and taxes = $620,000

Depreciation = $320,000

So, we can compute the cash flow by using following formula:

Cash Flow = EBIT × (1 - Tax Rate) + Depreciation

(a). For tax bracket = 35%

Here EBIT = EBITDA - Depreciation

= $620,000 - $320,000

= $300,000

Now by putting the value in the formula, we get:

Cash Flow = $300,000 × ( 1 - 35%) + $320,000

= $300,000 × 0.65 + $320,000

= $195,000 + $320,000

= $515,000

Hence, the cash flow is $515,000 for 35% tax bracket.

(b) For tax bracket = 20%

Here EBIT = EBITDA - Depreciation

= $620,000 - $320,000

= $300,000

Now by putting the value in the formula, we get:

Cash Flow = $300,000 × ( 1 - 20%) + $320,000

= $300,000 × 0.8 + $320,000

= $240,000 + $320,000

= $560,000

Hence, the cash flow is $560,000 for 20% tax bracket.

More needs to be done to capitalise on the power of the peer-to-peer networks that many music downloaders still use. A recent study found that regular downloaders of unlicensed music spent an average of £5.52 a month on legal digital music. This compares to just £1.27 spent by other music fans. The research clearly shows that music fans who breakpiracy laws are highly valuable customers. It also suggests that they are eager to adopt legitimate music services in the future. One researcher pointed out that "There's a myth that all illegal downloaders are mercenaries hell-bent on breaking
the law in pursuit of free music. In reality hardcore fans "are extremely enthusiastic about paid-for services, as long as they are suitably compelling, he said.
People who download unlicensed music tend not buy legal digital music.

A True
B False
C Cannot Say

Answers

The answer to the prompt that "People who download unlicensed music tend not buy legal digital music" is False.

Judging from the passage above, the answer to this prompt is false.

The passage makes it clear that those who regularly downloaded unlicensed music also "spent an average of £5.52 a month on legal digital music."

This shows that this crop of individuals are willing to purchase legal digital music.

Learn more about unlicensed music here:

brainly.com/question/7668788
Im pretty sure it’s true

The current sections of Birmingham Inc.’s balance sheets at December 31, 2019 and 2020, are presented here. Birmingham’s net income for 2020 was $193,000. The income statement included depreciation expense, $25,000, amortization expense, $10,000, and a gain on disposal of equipment, $7,000. The equipment was sold for $47,000. Birmingham also issued bonds for $60,000. 2020 2019Current assets Cash $417,000 $ 99,000 Accounts receivable 120,000 93,000Inventory 159,000 176,000Prepaid expenses 29,000 24,000Total current assets $725,000 $392,000 Current liabilities Accrued expenses payable $ 17,000 $ 6,000 Accounts payable 88,000 94,000Total current liabilities $105,000 $100,000 InstructionsPrepare the net cash provided by operating activities section of the company’s statement of cash flows for the year ended December 31, 2020 using the indirect method.

Answers

Answer:

Net Income 193,000

Non-monetary terms:

Depreciation expense    25,000

amortization expense       10,000

gain on disposal               (7,000)  

Adjusted Income            221,000

Change in Working Capital:

Increase in A/R        (27,000)

Decreasein Inv          17,000

Increase in Prepaid   (5,000)

Increase Accrued /P   11,000

Decreasein A/P         (6,000)

Change In Working Capital     (10,000)

From Operating Activities    211,000

Investing

Sale of Equipment  47,000

Financing

Bonds Issued   60,000

Cash Flow              318,000

Beginning Cash   99,000

Cash Flow           318,000

Ending Cash        417,000

Explanation:

We first remove the non.monetary concetps from the net income.

Then we adjust for the change in working capital which are the incrase and decrease in the current assets and liabilities account

Increase in asset and decrease in liabilities represent cash outflow

while the opposite is true when an asset decrease(convert to cash) or a liablity increase (delay of the payment)
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