Henna Co. produces and sells two products, T and O. It manufactures these products in separate factories and markets them through different channels. They have no shared costs. This year, the company sold 59,000 units of each product. Sales and costs for each product follow. Product T Product O Sales $ 997,100 $ 997,100 Variable costs 697,970 99,710 Contribution margin 299,130 897,390 Fixed costs 150,130 748,390 Income before taxes 149,000 149,000 Income taxes (30% rate) 44,700 44,700 Net income $ 104,300 $ 104,300 Required: 1. Compute the break-even point in dollar sales for each product

Answers

Answer 1

Answer:

Explanation:

Product T

Contribution Margin Ratio=Contribution Margin / Sales

Contribution margin ratio= 299,130.00/ 997,100

Contribution margin ratio=30.00%

Break-Even Dollars=

Fixed costs/Contribution margin ratio Break-even dollars=$150,130/30%

Break-even dollars=$500,433

Product O

Contribution Margin Ratio=Contribution Margin / Sales

Contribution margin ratio= 897,390/ 997,100

Contribution margin ratio= 90.00%

Break-Even Dollars=Fixed costs/ Contribution margin ratio

Break-Even Dollars=$748,390/90% Break-Even Dollars=831,544


Related Questions

IF COUNTRIES FIND WAYS OF IMPROVING THEIR FACTOR OF PRODUCTIVITY

Answers

Answer:

THEIR FACTOR OF PRODUCTIVITY will increase.

Assume that a $1,000,000 par value, semiannual coupon U.S. Treasury note with four years to maturity (YTM) has a coupon rate of 6%. The yield to maturity of the bond is 11.00%. Using this information and ignoring the other costs involved, calculate the value of the Treasury note:_________.
a.) $841,635.85
b.) $715,390.47
c.) $530,230.59
d.) $1,009,963.02

Answers

Answer:

a.) $841,635.85

Explanation:

The value of the Treasury note is the present value of its future cash flows, its semiannual coupon payments and the face value receivable by the investors in the T-note at maturity.

Semiannual coupon=face value*coupon rate*6/12

face value=$1,000,000

coupon rate=6%

semiannual coupon=$1,000,000*6%*6/12

semiannual coupon=$30,000( there would 8 semiannual coupons in 4 years)

The present value of the cash flows can be determined using a financial calculator bearing in mind that the calculator would be set to its default end mode before making the following inputs:

N=8(semiannual coupons)

PMT=30000(amount of each semiannual coupon)

I/Y=5.50%(semiannual yield to maturity=11.00%*6/12)

FV=1000000(the face value of T-note)

CPT

PV=$841,635.85  

Suppose eggs are only sold by the dozen and priced in whole dollar amounts. No eggs are demanded at a price above $7 per dozen. At a price equal to $7 per dozen, 10 dozen eggs are demanded. If the price falls to $6 per dozen, then 11 dozen are demanded. At a price of $5 per dozen, 12 dozen are demanded. When the price falls to $4 then 13 dozen are demanded. Suppose also that this market is operating in the short run and the quantity of eggs supplied is fixed at 12 dozen eggs. What are the equilibrium price and quantity in this market?

Answers

Answer:

$5

12

Explanation:

Equilibrium price is the price at which quantity demand equal quantity supplied. Above equilibrium price there is a surplus - quantity supplied exceeds quantity demanded.

Below equilibrium price there is a shortage - quantity demanded exceeds quantity supplied

from the question, the following table can be determined

P      Qd        Qs

$7     10

$6      11

$5      12        12

$4      13     

At equilibrium price, quantity demanded equal quantity supplied. this price is $5 and quantity is 12

​Cyberphone, a manufacturer of cell phone​ accessories, ended the current year with annual sales​ (at cost) of ​$ million. During the​ year, the inventory of accessories turned over times. For the next​ year, Cyberphone plans to increase annual sales​ (at cost) by percent. a. What is the increase in the average aggregate inventory value required if Cyberphone maintains the same inventory turnover during the next​ year? ​$ nothing. ​(Enter your response as an​ integer.)

Answers

Answer:

sorry po

Explanation:

jfkskdhdjdjndjd

An example of a push strategy is ________. organizing couponing campaigns utilizing newspaper advertising using television advertising employing direct marketing paying a shelf fee

Answers

Answer: Using television advertising

Explanation:

Push marketing strategy, refers to the strategy whereby take its products to the consumers in order to increase the exposure of the product.

Push marketing simply means pushing the brand through the use of promotions and paid advertisiment. On the other hand, pull strategy draws customers towards the product.

Mideast Airlines purchased a 777 aircraft on January 1, 2020 at a cost of
$40,000,000. The estimated useful life of the aircraft is 20 years, with an
estimated salvage value of $6,000,000. What is the accumulated
depreciation and book value at December 31, 2022, using the straight-line
method

Answers

Answer:

3,400,000 accumulated depreciation, 36,600,000 book value

Explanation:

Cost - salvage = amount to be depreciated

40,000,000-6,000,000=34,000,000 amount to be deprecated

34,000,000/20 years =1,700,000 depreciation per year

1,700,000x2-3,400,000 accumulated depreciation after 2 years

40,000,000-3,400,000=36,600,000 book value

Harris Fabrics computes its plantwide predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year, it estimated that 44,000 direct labor-hours would be required for the period’s estimated level of production. The company also estimated $521,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $2.00 per direct labor-hour. Harris’s actual manufacturing overhead cost for the year was $687,120 and its actual total direct labor was 44,500 hours. Required: Compute the company’s plantwide predetermined overhead rate for the year. (Round your answer to 2 decimal places.)

Answers

Answer:

Predetermined manufacturing overhead rate= $13.84 per direct labor hour

Explanation:

To calculate the predetermined manufacturing overhead rate we need to use the following formula:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= (521,000 / 44,000) + 2

Predetermined manufacturing overhead rate= 11.84 + 2

Predetermined manufacturing overhead rate= $13.84 per direct labor hour

Ford Motor Company agreed to pay its workers ​$37 an hour in 1999 and ​$37 an hour in 2001. The CPI in 1999 was 166 and in 2001 was 180. Calculate the real wage rate in each year​ (to the nearest​ cent). Did these workers really get a pay raise between 1999 and​ 2001?

Answers

Answer:

No, the wage rate did not raise.

Explanation:

Given the nominal wage rate for the year 1999 = $37

CPI for 1999 = 166

The real wage for the year 1999 = [ Nominal wage / CPI ] x 100

The real wage for the year 1999 = [ 37/ 166] x 100 = $22.28

Given the nominal wage rate for the year 2001 = $37

CPI for 2001 = 180

The real wage for the year 2001 = [ Nominal wage / CPI ] x 100

The real wage for the year 2001 = [ 37/ 180] x 100 = $20.55

No the wage rate did not raise.

Josiah's team missed a crucial deadline and lost a major client due to poor communication. As a result, his team is experiencing trust issues. Josiah is looking for ways to improve trust across the team as a whole and has generated a few ideas. All of the following are likely to increase trust except:________.
a. Josiah creates a poster board with team goals, indicating the roles of each team member.
b. Josiah plans to provide his team with more project training sessions to help improve their efficiency both as dividuals and as a group.
c. Josiah conducts individual performance reviews in front of the whole group so no one feels singled out
d. Josiah has individual check-ins with his team members to provide feedback

Answers

C, talking about individual issues in front of a group can make team members feel uncomfortable. Talking with team members individually and providing feedback privately will create a more comfortable environment.

Ramble On Co. wishes to maintain a growth rate of 13.6 percent per year, a debt-equity ratio of 1.8, and a dividend payout ratio of 30 percent. The ratio of total assets to sales is constant at .98. What profit margin must the firm achieve

Answers

Answer: 5.99%

Explanation:

Based on the question,

Dividend payout ratio = 30%

Therefore, the retention ratio will be:

= 1 - 30%

= 70%

Growth rate = 13.6%

We'll the use the sustainable growth rate formula which will be:

0.136 = (ROE x 0.7)/ (1-(ROE x 0.7))

0.136(1 - (0.7ROE)) = 0.7ROE

ROE = 0.136/0.7952

ROE = 0.171026

Then, the Profit margin will be:

ROE = Profit Margin x Asset Turnover x Equity multiplier

0.171026 = PM x (1/0.98) x (1 + 1.8)

0.171026 = PM x (1/0.98) x 2.8

PM = 0.171026 x 0.98/2.8

PM = 0.0598591

Profit margin = 5.99%

Favre and Carter Law Office employ 12 full-time attorneys and 5 paraprofessionals. Budgeted salaries include $100,000 for each attorney and $30,000 per paraprofessional. For 20x1, indirect costs were budgeted at $250,000, but actually amounted to $300,000. Actual salaries were $110,000 for each attorney and $30,000 for each paraprofessional. Direct and indirect costs are applied on a professional labor-hour basis that includes both attorney and paraprofessional hours. Total budgeted labor-hours were 50,000; however, actual labor-hours were 60,000.
How much should the client be billed in a normal costing system which uses budgeted rate and cost allocations are based on actual data, when 1,000 professional labor-hours were used?
a. $27,000
b. $32,000
c. $34,800
d. $37,400

Answers

Answer:

Billed costs= $32,000

Explanation:

Giving the following information:

Total estimated cost attorney= 12*100,000= $1,200,000

Total estimated cost paraprofessional= 5*30,000= $150,000

Estimated Indirect costs= $250,000

Estimated number of hours= 50,000

First, we need to calculate the allocation rate:

Allocation rate= total estimated costs for the period/ total amount of allocation base

Allocation rate=   (1,200,000 + 150,000 + 250,000) / 50,000

Allocation rate= 1,600,000/50,000

Allocation rate= $32

Now, for 1,000 hours:

Billed costs= 1,000*32= $32,000

Brown Cow Dairy uses the aging approach to estimate bad debt expense. The ending balance of each account receivable is aged on the basis of three time periods as follows: (1) not yet due, $14,000; (2) up to 120 days past due, $4,500; and (3) more than 120 days past due, $2,500. Experience has shown that for each age group, the average loss rate on the amount of the receivables at year-end due to uncollectibility is (1) 2 percent, (2) 12 percent, and (3) 30 percent, respectively. At December 31 (end of the current year), the Allowance for Doubtful Accounts balance is $800 (credit) before the end-of-period adjusting entry is made. Data during the current year follow:

a. During December, an Account Receivable (Patty's Bake Shop) of $750 from a prior sale was determined to be uncollectible; therefore, it was written off immediately as a bad debt.
b. On December 31, the appropriate adjusting entry for the year was recorded.

Required:
1. Give the required journal entries for the two items listed above.
2. Show how the amounts related to Accounts Receivable and Bad Debt Expense would be reported on the income statement and balance sheet for the current year. Disregard income tax considerations.

Answers

Answer:

Brown Cow Dairy

1. Journal Entries:

a. Debit Allowance for Uncollectibles $750

   Credit Accounts Receivable $750

To write-off an uncollectible account.

b. Debit Bad Debts Expense $1,520

   Credit Allowance for Doubtful Accounts $1,520

To record bad debts expense for the year.

2. Amounts that would be reported:

Income Statement:

Bad debts expense $1,520

Balance Sheet:

Accounts Receivable $21,000

less Allowance for Doubtful accounts $1,570

Explanation:

a) Data and Calculations:

(1) not yet due, $14,000                              *    2% = $280

(2) up to 120 days past due, $4,500         *   12% =   540

(3) more than 120 days past due, $2,500 * 30% =   750

Total                                              $21,000            $1,570

Balance of Allowance for Doubtful Accounts = $800

a. Debit Allowance for Uncollectibles $750

   Credit Accounts Receivable $750

To write-off an uncollectible account.

b. Debit Bad Debts Expense $1,520

   Credit Allowance for Doubtful Accounts $1,520

To record bad debts expense for the year.

A small business sold an equipment for $30,000 after depreciating the equipment using the MACRS depreciation method. The applicable federal tax rate for the company is 39%. The federal tax liability on this depreciation recapture is $10,200 if the company also had other taxable income of $200,000 in that year.

a. True
b. False

Answers

Answer::::: is false

On January 1, Pharoah Company had 87000 shares of $10 par value common stock outstanding. On May 7, the company declared a 5% stock dividend to stockholders of record on May 21. Market value of the stock was $16 on May 7. The stock was distributed on May 24. The entry to record the transaction of May 24 would include a

Answers

Answer: credit to Common Stock Dividends Distributable for $43500

Explanation:

Based on the information given in the question, the entry to record the transaction of May 24 goes thus:

Debit Stock Dividend = 87000 × 5% × $16 = $69600

Credit To Common Stock Dividend Distributable = 87000 × 5% × $10 = $43500

Credit To Paid in capital in excess of Par - Common Stock = $69600 - $43500 = $26100

You are considering an investment that promises to pay $1,000 per year for the next 10 years. The interest rate associated with investments having similar risk is 6.0%. How much would you be willing to pay for this investment

Answers

Answer:

$7360.09

Explanation:

the amount i would be willing to pay can be determined by calculating the present value of the cash flows

Present value is the sum of discounted cash flows

Present value can be calculated using a financial calculator

Cash flow each year from year 1 to 10 = 1000

I = 6%

PV = $7360.09

To determine PV using a financial calculator:

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.  

More than 99% of all U.S. firms are classified as small businesses, and they employ about half of private workers. A small business is defined as any independently owned and operated business that is not dominant in its competitive area and does not employ more than 500 people. Understanding the advantages and disadvantages of small business ownership is crucial for any potential entrepreneur.
Match each statement or scenario with the appropriate advantage or disadvantage of small business
i. ownership.ii. Focusiii. Reputationiv. High stress levelv. Inexperience/Incompetencevi. Flexibilityvii.Inability to cope with growthviii.Costsix. Independencex. High failure rateMatch each of the options above to the items below.1. One of the leading reasons for becoming your own boss. 2. A 20-employee factory does not have a designated accounting or advertising department.3. The pizzas offered on the Patrick’s Pizza menu are often based on the types of produce in season.4. Mike’s trucking business provides specific information and products to commercial truck drivers.5. Brandy’s nursery offers delivery and expert installation of their trees at no extra cost to the customer and will replace any defective one up to 3 years after purchase.6. Sue works more than 60 hours a week at her construction business and cannot find reliable suppliers for lumber inventory.
7. Half of all new employer firms fail within the first five years.8. As a fitness expert, Tyler is having difficulties understanding the accounting requirements for his bank business loan for his workout facility.9. Circumstances such as products not arriving on time due to limited capacity affect the reputation of a company more than any other factor.

Answers

Answer:

A

Explanation:

The primary purpose for using the the mean absolute error (MAE) in forecasting is to: A. remove forecast error B. estimate the trend line C. estimate forecast error D. seasonally adjust the forecast

Answers

Answer:

measure forecast accuracy

Explanation:

The main purpose for using the mean absolute error is to do the forecast in an accurate manner. Also, it provides the measure for total forecast error for the given model

Therefore as per the given situation, the above represent the answer as neither it remove the error, nor estimated the trend line, etc

So, the same should be considered

If the best operating level of a process X is 1026 bottles per day and the actual output during a day is 786 bottles, then what is the capacity utilization rate for process X

Answers

Answer:

greater than 70% but less than or equal to 90%

Explanation:

The computation of the capacity utilization rate for process X is shown below:

As we know that

Capacity Utilization = (Actual Output ÷ Design Capacity) × 100

=  (786 ÷ 1026) × 100

= 76.61%

So, it is greater than 70% but less than or equal to 90%

What would be the annual cost saved by shifting from the ​-bag lot size to the​ EOQ? The annual holding cost with the EOQ is ​$ nothing. ​(Enter your response rounded to two decimal​ places.)

Answers

Answer:

Without Calculating The... Problem 13 Current on-hand inventory is 310 bags, with no open orders or. Problem 13 ... What would be the annual cost saved by shifting from the 505-​bag lot size to the EOQ? The annual holding cost with the EOQ is $ 690.15.

Explanation:

does it help??

what is the future value of ordinary annuity makes 2000 every month 10 years interest rate is 7% g

Answers

Answer:

The future value of the ordinary annuity is:

= $346,169.61.

Explanation:

a) Data and Calculations:

Ordinary annuity receipt/payment = $2,000

Payment is made monthly for 10 years (120 months)

Interest rate = 7%

From an online financial calculator, the future value is:

N (# of periods)  120

I/Y (Interest per year)  7

PV (Present Value)  0

PMT (Periodic Payment)  2000

 

Results

FV = $346,169.61

Sum of all periodic payments $240,000.00

Total Interest $106,169.61

A primary function of the promotional mix is to Multiple Choice explain how to use a product. persuade consumers to try a product. inform customers of complementary offerings. inform customers of pricing changes. point out flaws in competitors' products.

Answers

Answer: persuade consumers to try a product.

Explanation:

The Promotional Mix has to do with the promotional tools which are used by a company in order to create, and increase the demand for the goods and services offered by the company.

The Promotional Mix integrates promotional tools like direct marketing, personal selling, Advertising, Sales Promotion, etc

The promotional mix is useful in informing the prospective buyers about the importance of a good or service and also convince them to try it and the benefits attached to the product.

Law Office employ 12 full-time attorneys and 5 paraprofessionals. Budgeted salaries include $100,000 for each attorney and $30,000 per paraprofessional. For 20x1, indirect costs were budgeted at $250,000, but actually amounted to $300,000. Actual salaries were $110,000 for each attorney and $30,000 for each paraprofessional. Direct and indirect costs are applied on a professional labor-hour basis that includes both attorney and paraprofessional hours. Total budgeted labor-hours were 50,000; however, actual labor-hours were 60,000.
How much should the client be billed in a normal costing system which uses budgeted rate and cost allocations are based on actual data, when 1,000 professional labor-hours were used?a. $27,000b. $32,000c. $34,800d. $37,400

Answers

Answer:

See below

Explanation:

Given the above information,

= ($110,000 × 12 + $30,000 × 5) / 60,000 × 1,000

= ($1,320,000 + $150,000) / 60,000,000

= $1,470,000 / 60,000,000 + $300,000/60,000) × 1,000

= $0.0245 + $5,000

= $5,000

You sell 25,000 loaf of bread per year. The carrying cost associated the main ingredient wheat flour is estimated to be $8 per unit (amount used for 1 loaf of bread) per year, and the ordering cost is $10 per order. And assume 1 year is 300 days and lead time is 3 days.

Required:
a. What is the EOQ?
b. How much money you will lose if you order 300 units of wheat flour? Calculate the total cost of inventory with EOQ model and with order size is 300. The difference will give you the answer.
c. Calculate the re-order point (assuming no uncertainty)?

Answers

Answer:

Annual Demand (D) = 25000

Carrying Cost (H) = 8

Ordering Costs (S) = 10

Number of working days = 300

Lead Time (Lt) = 3 days

a. EOQ = Sqrt (2*D*S/H)

EOQ = Sqrt (2*25000*10/8)

EOQ = Sqrt (62500)

EOQ = 250

b. Total Cost = (D * S) / EOQ + (EOQ * H) / 2

Total Cost = (25000 * 10) / 250 + (250 * 8) / 2

Total Cost = 1000 + 1000

Total Cost = 2000

Now, we calculate total Cost with order size: of 300

Total Cost = (25000 * 10) / 300 + (300 * 8) / 2

Total Costs = 833.3333 + 1200

Total Cost = 2,033.3333

The amount to lost if we order 300 units of wheat flour is as follows

= 2033.33 - 2000

= $33.33

3. ROP = (D / Number of working days) x Lt

ROP = (25000 / 300) * 3

ROP = 83.3333 * 3

ROP = 249.9999

ROP = 250

After successfully completing your corporate finance class, you feel the next challenge ahead is to serve on the board of directors of Schenkel Enterprises. Unfortunately, you will be the only individual voting for you. a. If the company has 470,000 shares outstanding and the stock currently sells for $41, how much will it cost you to buy a seat if the company uses straight voting

Answers

Answer: $9,635,041

Explanation:

With 470,000 shares, you will need to hold a majority to vote yourself into the board.

To gain a majority, you need more than 50% of the shares:

= 470,000 / 2 + 1 share to give you majority

= 235,001 shares

The cost of 235,001 shares is:

= 235,001 * 41

= $9,635,041

Photo Framing's cost formula for its supplies cost is $1,000 per month plus $10 per frame. For the month of November, the company planned for activity of 610 frames, but the actual level of activity was 600 frames. The actual supplies cost for the month was $7,600. The spending variance for supplies cost in November would be closest to:

Answers

Answer:

$600 U

Explanation:

Calculation to determine what The spending variance for supplies cost in November would be closest to:

Actual results$ 7600

Less Flexible budget $7,000

($1,000 + $10 × 600)

Spending variance $600 U

($7,600-$7,000)

Therefore The spending variance for supplies cost in November would be closest to: $600 U

Why is nominal value important ?

Answers

Answer: A preferred stock's nominal (par) value is important in that it is used to calculate its dividend while the nominal value of common stock is an arbitrary value assigned for balance sheet purposes. In economics, nominal value refers to the current monetary value and does not adjust for the effects of inflation.

Explanation:

Hope it helps

1. Prepare the December 31 adjusting entries for the following transactions. Omit explanations. 1. Fees accrued but not billed, $6,300. 2. The supplies account balance on December 31, $4,750; supplies on hand, $960. 3. Wages accrued but not paid, $2,700. 4. Depreciation of office equipment, $1,650. 5. Rent expired during year, $10,800.

Answers

Answer:

1. Debit Accounts Receivable $6300

Credit Fees Revenue $6300

2. Debit Supplies Expense $3790

Credit Supplies $3790

3. Debit Wages Expense $2700

Credit Wages Payable $2700

4. Debit Depreciation Expense $1650

Credit Accumulated Depreciation-office equip. $1650

5. Debit Rent Expense $10800

Credit Prepaid Rent $10800

Explanation:

Preparation of the December 31 adjusting entries

1. Debit Accounts Receivable $6300

Credit Fees Revenue $6300

2. Debit Supplies Expense $3790

Credit Supplies $3790

(4750-960)

3. Debit Wages Expense $2700

Credit Wages Payable $2700

4. Debit Depreciation Expense $1650

Credit Accumulated Depreciation-office equip. $1650

5. Debit Rent Expense $10800

Credit Prepaid Rent $10800

Wieters Industries manufactures several products including a basic case for a popular smartphone. The company is considering adopting an activity-based costing approach for setting its budget. The company's production activities, budgeted activity costs, and cost drivers for the coming year are as follows:

Activity Activity Overhead $ Cost Driver Cost Driver Quantity
Machine setup $200,000 # of setups    800
Inspection   120,000 # of quality tests    400
Materials receiving    252,000 # of purchase orders   1,800

The budgeted data for smartphone case production are as follows.

Direct materials $2.50 per unit
Direct labor $0.54 per unit
Number of setups 92
Number of quality tests 400
Number of purchase orders 50
Production 15,000 units

Required
a. Calculate the activity rate for each cost pool.
b. Calculate the activity-based unit cost of the smartphone case.

Answers

Answer:

Wieters Industries

a. Activity Rates:

Machine setup =    $250

Inspection =              300

Materials receiving   140

b. The activity-based unit cost of the smartphone case is:

= $13.04

Explanation:

a) Data and Calculations:

Activity             Activity Overhead $   Cost Driver      Cost Driver Quantity

Machine setup             $200,000        # of setups                   800

Inspection                      120,000       # of quality tests           400

Materials receiving      252,000       # of purchase orders   1,800

Total overhead costs  $572,000

Activity Rates:

Machine setup =    $250 ($200,000/800)

Inspection =              300 ($120,000/400)

Materials receiving   140 ($252,000/1,800)

Budgeted data for smartphone case production:

Direct materials $2.50 per unit

Direct labor $0.54 per unit

Number of setups 92

Number of quality tests 400

Number of purchase orders 50

Production 15,000 units

Overhead Applied to Smartphone Case:

Number of setups 92 * $250 =             $ 23,000

Number of quality tests 400 * $300 =    120,000

Number of purchase orders 50 * $140 =   7,000

Total overhead applied =                      $150,000

Overhead per unit = $10 ($150,000/15,000)

Unit Cost of Smartphone Case:

Direct materials per unit  $2.50

Direct labor per unit        $0.54

Overhead per unit         $10.00

Total unit cost =             $13.04

Consider two stocks, A and B. Stock A has an expected return of 10% and a beta of 1.2. Stock B has an expected return of 14% and a beta of 1.8. The expected market rate of return is 9% and the risk-free rate is 5%. Security __________ would be considered the better buy because

Answers

Answer:

B; it offers an expected excess return of 1.8%

Explanation:

Here are the options :

A; it offers an expected excess return of .2%A; it offers an expected excess return of 2.2%B; it offers an expected excess return of 1.8%B; it offers an expected return of 2.4%

to determine which stock is the better buy, we have to calculate the expected return of the stocks using CAPM

According to the capital asset price model: Expected rate of return = risk free + beta x (market rate of return - risk free rate of return)

Stock A = 5% + 1.2(9% - 5%) = 9.8%

Stock B = 5% + 1.8(9% - 5%) = 12.20%

The next step is to determine the excess return

stated expected return - calculated expected return = excess return

Stock A's excess return = 10% - 9.8% - 0.2%

Stock B's excess return = 14 - 12.20 = 1.8%

Security B would be considered because it has a higher excess return

What will be the nominal rate of return on a perpetual preferred stock with a $100 par value, a stated dividend of 12% of par, and a current market price of (a) $56.00, (b) $76.00, (c) $116.00, and (d) $133.00? Round your answers to two decimal places. %

Answers

Given :

[tex] \text{Preferred share par value = $30} [/tex]

[tex] \text{Dividend per share (Dp) = $10 ($100×10%)} [/tex]

Required :

[tex] \text{Normal rate of return (rp)} [/tex]

Formula :

[tex] \text{rp =} \frac{Dp}{Vp} [/tex]

Where,

[tex] \text{Vp = price of preferred share} [/tex]

[tex] \text{Dp = dividend per share} [/tex]

[tex] \text{Rp = normal rate of return of preferred share} [/tex]

Solve for nomial rate of return (rp) :

Refer The Attachment
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what is butterfly cycle Which two factors contributed to the spread of Islam in Africa? (btw its TWO factors not just 1) A) Islam was already practiced by people in Africa. B) Many Africans no longer believed in their own religions. C) The Islamic empire extended into North Africa. D) The gold-salt trade brought Islamic Arabs into western and southern Africa. help me plesse how do i solve this multi step equation? What is Associative property mean? There are several attempts to explain Marvels Success via competetive strategy but they fall flat: competitve strategy, with this specific case neither predicts nor explains the outcome why? the taxi charges in a city consist of a fixed charge together with the charge for the distance covered. For a distance of 10 km, the charge paid is 105 and for a journey of 15 km, the charge paid is 155. How much does a person have to pay for traveling a distance of 25 km? disadvantages of using inorganic manure (3x^2+x)(5x^3-2x^2+7) HELP ASAP!! ILL MARK BRAINLIEST! David recorded the ages, in years, of the members of four high school clubs. Each club has the same number of members. A brief description of Davids data is shown.Music Club: This club has the same number of members older than 16 and younger than 16.Physics Club: This club has the greatest number of older members.Sports Club: This club has the greatest number of younger members.History Club: This club has the oldest member enrolled.David then made box plots showing his data. Match the labels of the clubs to the box plots. Drag and drop each club into the indicated rectangles. A Type I subsequent event refers to _______. an event that occurred after the date of the financial statements an event that is typified by debit entries to contra-revenue accounts a contingent event, that may or may not occur an event that most likely occurred before the date of the financial statements What is the missing variable??? the 200 g baseball has a horizontal velocity of 30 m/s when it is struck by the bat, B, weighing 900 g, moving at 47 m/s. during the impact with the bat, how many impules of importance are used to find the final velocity of the bat Among U.S. high school students, what is TRUE about intimate partner violence (IPV)?a.Teenage IPV looks very different from adult IPV.b.IPV affects about one tenth of the population.c.IPV occurs more in rural areas than in urban areas.d.IPV is not a significant problem. reverend parris did not want to expose the fact that the girls lied because___A.nobody would believe it and chaos or further mass hysteria would result B.he would be seen as a liar, tooC.it would make the church officials look like liarsD.his daughter would be seen as a liar, too, and his reputation be ruined Which characteristic distinguishes dwarf planets from planets?orbits the Sunis roundis not a moonhas not cleared its orbit of objects security awareness training that should be encouraged Read the compound sentence.Which is the correct way to punctuate the sentence?Dr. Burke wanted to trust her assistant with the secretformula but she was afraid her assistant was a spy:Dr. Burke wanted to trust her assistant with the secretformula; but she was afraid her assistant was a spy. aDr. Burke wanted to trust her assistant, with thesecret formula: but she was afraid her assistant was aSpy.Dr. Burke wanted to trust her assistant with the secretformula but she was afraid her assistant was a spy. a1D Dr. Burke wanted to trust her assistant with the secretformula, but she was afraid hel assistant was a spy. What were some disadvantages of the Roman Paved roads ? On Wednesday, a local hamburger shop sold a combined total of 294 hamburgers and cheeseburgers. The number of cheeseburgers sold was two times the number of hamburgers sold. How many hamburgers were sold on Wednesday? Which is the graph of f(x) = (x + 3)(x - 2)?Ty248o- 4 24HELP IM BEING TIMED