BUSINESS COLLEGE

The average annual return on the S&P 500 Index from 1986 to 1995 was 15.8 percent. The average annual T-bill yield during the same period was 5.6 percent. What was the market risk premium during these ten years?

Answers

Answer 1
Answer:

Answer:

10.20%

Explanation:

In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below

Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)

where.

The Market rate of return - Risk-free rate of return) is also known as the market risk premium and the same is applied.

So, the market risk premium would be

= Average annual return - average annual t-bill yield

= 15.8% - 5.6%

= 10.20%

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Problem 1-11 For most products, higher prices result in a decreased demand, whereas lower prices result in an increased demand. Let d = annual demand for a product in units p = price per unit Assume that a firm accepts the following price-demand relationship as being realistic: d = 800 - 10p where p must be between $20 and $70. How many units can the firm sell at the $20 per-unit price? Round your answer to the nearest whole number.
Jolsan Technologies had received a contract to produce two units of a new cruise missile guidance control. The first unit took 5,000 hours to complete and cost $30,000 in materials and equipment usage. The second took 4,500 hours and cost $24,000 in materials and equipment usage. Labor cost is charged at $20 per hour. The prime contractor has now approached Jolsan Technologies and asked to submit a bid for the cost of producing another 20 guidance controls. Use Exhibit 6.4 and Exhibit 6.5. What will the last unit cost to build
12. A company has an EPS of $2.00, a book value per share of $20, and a market/book ratio of 1.2x. what is its P/E ratio

Under the periodic inventory system: a. inventory records are updated immediately after each purchase.
b. inventory must be counted at the end of each accounting period.
c. inventory does not have to be counted. (It can be taken from the accounting records.)
d. inventory levels must be counted every day.

Answers

Answer:

The correct answer is letter "B": inventory must be counted at the end of each accounting period.

Explanation:

The Periodic Inventory System is an approach of keeping track of the inflows and outflows of the inventory of a company after determined periods. Starting the year, companies using this inventory method count the number of items in their inventory which will vary during the course of a period and by the end of it another count is made to find out the difference between the starting and ending inventory. The calculation helps to find out the Cost of Goods Sold by the firm (COGS).

Aspin Corporation’s charter authorizes issuance of 2,100,000 shares of common stock. Currently, 1,400,000 shares are outstanding, and 300,000 shares are being held as treasury stock. The firm wishes to raise $44,000,000 for plant expansion. Discussions with its investment bankers indicate that the sale of new common stock will net the firm $55 per share.a.  What is the maximum number of new shares of common stock that the firm can sell without receiving further​authorization?b.  Judging on the basis of the data given and your finding in part a in part a, will the firm be able to raise the needed funds without receiving further​ authorization?c.  What must the firm do to obtain authorization to issue more than the number of shares found in part a?

Answers

Answer:

a) Maximum no. of shares that the company can issue

= Total Authorized Shares - Shares Outstanding

= 2100000 - 1400000

= 700,000

b) Number of shares to be issued to raise $44,000,000 at $55 per share

= 44,000,000 / 55

= 800,000

No, the firm would not be able to raise the needed fund.

c) The company will have to increase the number of authorized shares which would involve making amendments to its charter of incorporation. The amendments to the charter can be done only by vote of the existing shareholders.

Draft an inquiry letter for purchase of 10 units of IBM P4 computers and 2 units of Lx 300 Epson printers to Kathmandu Computers and Engineering Kathmandu. ​

Answers

Based on writing standards, the inquiryletter for purchase should begin with the sender's address and be written like a formal letter.

Structures of Letter of Inquiry.

  • The sender's address should be written at the beginning of the letter, followed by the receiver's address.

  • The letter must contain all the elements of the enquiring item, including their quantities.

  • There must be the date and address of the receiver included.

  • The letter's subject must be written clearly before the letter's content.

  • Ensure you provide the expected salutation at the beginning of the letter.

  • Write clearly and straightforward.

  • Provide reasons and inquiry descriptions.

  • Add your signature, name, and designation at the end of the letter.

Hence, in this case, it is concluded that there are specific ways to write a good inquiry letter.

Learn more about Inquiry Letter here: brainly.com/question/4208084

Eaton Tool Company has fixed costs of $266, 600, sells its units for $68, and has variable costs of $37 per unit. a. Compute the break-even point.
b. Ms. Eaton comes up with a new plan to cut fixed costs to $210,000. However, more labor will now be required, which will increase variable costs per unit to $40. The sales price will remain at $68. What is the new break-even point?
c. . Under the new plan, what is likely to happen to profitability at very high volume levels (compared to the old plan)?

a. Profitability will be less
b. Profitability will be more

Answers

Answer:

a. $584,800

b. $510,000

c.  Profitability will be more

Explanation:

a.

Contribution Margin = Selling price - variable cost  = $68 - $37 = $31

The break-even point is the level of sales at which the business incur no profit no loss.Fixed and variable costs are covered at this level of sales. Use following formula of break-even to calculate the fixed cost.

Break-even point = Fixed cost / Contribution margin ratio

Break-even point = $266,600 / ($31 / $68) = $584,800

b.

Contribution Margin = Selling price - variable cost  = $68 - $40 = $28

Break-even point = Fixed cost / Contribution margin ratio

Break-even point = $210,000 / ($28 / $68) = $510,000

c.

As the break-even point is decreases it means the cost of associated with the product is decreased because the selling price remains constant. Although there is an increase in the variable cost but reduction in fixed cost has more effect than increase in variable cost.

Which is a monetary policy that would be useful in stopping deflation?A)
decreasing taxation
B)
increasing the discount rate
C)
increasing government spending
D)
decreasing the reserve requirement

Answers

The correct answer is:

B) increasing the discount rate

Gibson Company paid $12,000 on June 1, 2014 for a two-year insurance policy and recorded the entire amount as Insurance Expense. The December 31, 2014 adjusting entry is A. Debit Prepaid Insurance and credit Insurance Expense, $3,500 B. Debit Prepaid Insurance and credit Insurance Expense, $8,500 C. Debit Insurance Expense and credit Prepaid Insurance, $3,500 D. Debit Insurance Expense and credit Prepaid Insurance, $8,500

Answers

Answer:

None of the options is correct, given the facts in the question.

The appropriate answer is:

Debit Prepaid insurance                             $12,000

Credit Insurance expenses                        $12,000

(Reversal of erroneous posting to insurance expenses)

Debit Insurance expenses                          $3,000

Credit Prepaid insurance                            $3,000

(To record 6 months prepaid insurance amortization)

Explanation:

Prepaid insurance is a payment for insurance policy premium in advance, whose service has not been fully enjoyed.

Gibson Company paid $12,000 for a two-year insurance policy. This was erroneously recorded as an expense. This wrong posting has to be reversed for the purpose of audit trail, as provided by the first journal.

To determine the monthly amortization, simply divide $12,000 by 24 months to arrive $500 amortization monthly. Since we are adjusting for December 31, 2014 (6 months from June 1, 2014), the 2014 amortization will be $500 x 6 months = $3,000. This has to be adjusted for by applying the second journals above.
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