Your investment has a 20% chance of earning a 30% rate of return, a 50% chance of earning a 10% rate of return, and a 30% chance of losing 6%. What is your expected return on this investment

Answers

Answer 1

Answer:

9.2%

Explanation:

expected return of the investment = potential return x chance of each return happening

Expected return of the investment:

20% chance of occurring x 30% potential return = 0.2 x 30% = 6%50% chance of occurring x 10% potential return = 0.5 x 10% = 5%30% chance of occurring x -6% potential return = 0.3 x -6% = -1.8%total expected return = 9.2%

Related Questions

Rossdale Co. stock currently sells for $72.87 per share and has a beta of 1.22. The market risk premium is 7.10 percent and the risk-free rate is 2.90 percent annually. The company just paid a dividend of $4.29 per share, which it has pledged to increase at an annual rate of 3.45 percent indefinitely. What is your best estimate of the company's cost of equity?

Answers

Answer:

Cost of Equity =11.56%

Explanation:

The cost of equity can be determined using any of the following methods:

The Dividend Valuation Model(DVM)Capital Asset Pricing Model (CAPM)

The Dividend Valuation Model(DVM) is a technique used to value the worth of an asset.

According to this model, the value of an asset is the sum of the present values of the future cash flows would that arise from the asset discounted at the required rate of return.  

Price = D/Kp

D- Dividend payable

Kp- cost of preferred stock

The capital asset pricing model (CAPM): relates the price of a share to the market risk or systematic risk. The systematic risk is that which affects all the all the economic agents, e.g inflation, interest rate e.t.c  

This CAPM is considered superior to DVM because it incorporates risk. Hence, we will use the CAPM  

Using the CAPM , the expected return on a asset is given as follows:  

E(r)= Rf +β(Rm-Rf)  

E(r) =? , Rf- 2.90%, Rm-Rf- 7.10% β- 1.22

E(r) = 2.90% + 1.22×(7.10)% = 11.562  %

Cost of Equity =11.56%

Jenny Corp. needs to raise $53 million to fund a new project. The company will sell shares at a price of $29.00 in a general cash offer and the company's underwriters will charge a spread of 7.5 percent. The direct flotation costs associated with the issue are $925,000. How many shares need to be sold?

Answers

Answer:

2,010,252 Shares

Explanation:

The funds that are to be raised = $53,000,000

Spread = 7.5%

Share price = $29.00

Flotation cost with issue = 925,000

We have that:

(53000000+925000)/92.5 * 100

(539,250,000/92.5)x100

= $58297.973 x 100

= $58297297.3

The offer per share is placed at $29.00

So to get the number of shares sold:

$58297297.3 / $29.00

= 2,010,252 shares are to be sold.

An S corporation earns per share before taxes. The corporate tax rate is​ 35%, the personal tax rate on dividends is​ 20%, and the personal tax rate on​ non-dividend income is​ 39%. What is the total amount of taxes paid if the company pays a ​dividend?

Answers

Answer:

$2.73

Explanation:

Question is incomplete. But assuming the company earn per shares before tax is $7 and the company pays a dividend of $2

Hence, the total amount of taxes paid is = Company earn per shares *  personal tax rate on​ non-dividend income

= $7 * 39%

= $7 * 0.39

=$2.73

Auto Body Repair Shop (ABRS) promises to pay Ben $1,000 a week to work for ABRS. Ben accepts and quits his job with Car Care Service. ABRS fails to provide a job for Ben. Ben has a cause of action based on

Answers

Answer:

Breach of Contract

Explanation:

If a contract was signed that promised a job/salary, then rescinding the job by the prospective employer is grounds for a "Breach of Contract" lawsuit.

If the domino effect occurs as a result of changes in the money supply, what will most likely happen as an immediate result of interest rates being increased? Borrowing will decrease. Investing will decrease. Inflation will increase. Liquidity will increase.

Answers

Answer:

The answer is: interest rates will decrease

Explanation:

Just got correct on edge

If there is an increase in the interest rate, then borrowing will decrease.

The term "domino effect" refers to the cumulative effect that is produced by one event that eventually leads to the same effect on others. In other words, the domino effect is when one disaster affects or brings destruction or disruption to others, leading to similar events.

One result will lead to a chain reaction in this event, affecting the rest of the cycle. This means that like one domino's downfall brings the next domino down, one destruction will lead to the fall of the next, taking the cycle to the end until all falls. In this scenario, if the interest rates are being increased, then it will lead to a decreased rate of borrowing. A change in the money supply will increase the interest rate. This will only leave the customers looking for a way out, which means there will be a lower rate of borrowing.

In a domino effect, one event will bring the fall of the other. Therefore, if the interest rates increase, there will only be more problems for the customers. This will leave them reducing or decreasing the borrowing rate in the market. Thus, the correct answer is the first option.

Learn more about "domino theory" here:

brainly.com/question/12039657

"Industry A has 10 firms. The five largest firms have 21%, 20%, 19%, 18%, and 17% of the market. The remaining five firms each have 1% of the market. The four-firm concentration ratio for Industry A is 78%. What is the HHI for Industry A

Answers

Answer:

1820

Explanation:

The HHI is calculated by squaring the market share of each firm  in the industry.  

21% ²+ 20%² + 19%² + 18%² + 17%² + 1%² +1%² +1%² +1%² +1%² = 1820

A firm has net working capital of $2,715, net fixed assets of $22,407, sales of $31,350, and current liabilities of $3,908. How many dollars' worth of sales are generated from every $1 in total assets

Answers

Answer:

So, from every $1 of total assets, $1.08 worth of sales are generated.

Explanation:

To calculate how many dollars worth of sales are generated by $1 of total assets, we use the total assets turnover ratio. It is an accounting measure that measures the efficiency of the company's assets in generating sales. It calculates the dollar values of sales generated by each $1 of total assets. The formula for total assets turnover is,

Total Assets Turnover = Sales / Average Total Assets

We already know the level of sales. We need to determine the value of total assets first.

Total Assets = Fixed assets + Current Assets

As we know that net working capital = current assets - current liabilities,

So, the current assets are,

2715 = Current assets - 3908

2715 + 3908 = Current assets

Current assets = $6623

Total assets = 6623 + 22407

Total assets = $29030

Total Assets Turnover = 31350 / 29030

Total assets turnover = 1.0799 rounded off to 1.08

So, from every $1 of total assets, $1.08 worth of sales are generated.

21. A noncancelable lease contains an option to purchase a leased asset at a price that is sufficiently lower than the asset's expected fair value so that the exercise of the option appears reasonably certain. The fair value of the asset exceeds the lessor's cost of the asset. Therefore, the lease will be accounted for by the lessor as a(n):

Answers

Answer: A. Sales-type lease

Explanation:

A Sales type lease is one where the present value of all the lease payments of the Asset being leased is more than the cost/ carrying amount of the Asset.

The present value of the lease Payments is the Fair Value of the asset and as seen from the question, the fair value of the asset is more than the cost of the Asset. The lease will therefore be accounted for as a Sales type lease by the lessor.

It is worthy of note that this entry affects only the lessor.

Monte Services, Inc. is trying to establish the standard labor cost of a typical brake repair. The following data have been collected from time and motion studies conducted over the past month.

Actual time spent on the brake repairs 5 hours
Hourly wage rate $10
Payroll taxes 10% of wage rate
Setup and downtime 11% of actual labor time
Cleanup and rest periods 27% of actual labor time
Fringe benefits 25% of wage rate.

Required:
a. Determine the standard direct labor hours per brake repairs.
b. Determine the standard direct labor hourly rate.
c. Determine the standard direct labor cost per brake repair.

Answers

Answer and Explanation:

The computation is shown below:

1. The standard direct labor hours per brake repairs are shown below:

Actual time spent               5  hours

Setup and downtime (5 hours × 11%) 0.55

Cleanup and rest periods (5 hours × 27%) 1.35

Standard direct labor hours per brake repair 6.9

2. For standard direct labor hourly rate

Wage rate per hour $10

Payroll Taxes ($10 × 10%) $1

Fringe Benefits ($10 × 25%) $2.5

Standard direct labor hourly rate $13.5

3. For the standard direct labor cost per brake repair

= 6.9 hours × $13.5

= $93.50

Cadiz Co. uses flexible budgets to control its selling expenses. Monthly sales are expected to be from $300,000 to $360,000. Variable costs and their percentage relationships to sales are: Sales commissions 5% Advertising 4% Traveling 7% Delivery 1% Fixed selling expenses consist of sales salaries $40,000 and depreciation on delivery equipment $10,000. The actual selling expenses incurred in February, 2019, by Cadiz are as follows: Sales commissions $17,200 Advertising 12,000 Traveling 23,700 Delivery 2,400 Fixed selling expenses consist of sales salaries $41,500 and depreciation on delivery equipment $10,000. Prepare a flexible budget performance report, assuming that February sales were $330,000.

Answers

Answer:

Cadiz Co.

Flexible Budget Performance Report:

                                                       Budget

                                       Flexible            Actual       Variance

Sales                             $330,000       $330,000        $0

Variable costs:

Sales commissions           16,500            17,200         700  U

Advertising                        13,200            12,000      1,200  F

Traveling                           23,100            23,700        600  U

Delivery                              3,300             2,400         900  F

Fixed selling expenses:

Sales Salaries                  40,000           41,500       1,500  U

Depreciation: delivery     10,000           10,000         0       None

Total                                                                            700  U

Explanation:

a) Data:

                                                       Budget

                                          Static            Actual             Variance

Sales                             $360,000       $330,000      $30,000  U

Variable costs:

Sales commissions           18,500            17,200             1,300  F

Advertising                        14,400            12,000            2,400  F

Traveling                          25,200           23,700             1,500  F

Delivery                              3,600             2,400             1,200  F

Fixed selling expenses:

Sales Salaries                  40,000           41,500             1,500  U

Depreciation: delivery     10,000           10,000                 0     None

b) Flexible Variable Expenses:

Sales commission = 5% of $330,000 = $16,500

Advertising =  4% of $330,000 = $13,200

Traveling = 7% of $330,000 = $23,100

Delivery = 1% of $330,000 = $3,300

c) Cadiz Co.'s flexible budget changes with respect to the volume of sales.  Since some percentages of the sales are given for Sales commission, advertising, traveling, and delivery, these change as the volume of sales changes.  This flexible budget forms the basis for the management of Cadiz Co. to judge the actual performance with the budget, which enables control to be instituted.

Keating Co. is considering disposing of equipment with a cost of $55,000 and accumulated depreciation of $38,500. Keating Co. can sell the equipment through a broker for $29,000, less a 5% broker commission. Alternatively, Gunner Co. has offered to lease the equipment for five years for a total of $45,000. Keating will incur repair, insurance, and property tax expenses estimated at $12,000 over the five-year period. At lease-end, the equipment is expected to have no residual value. The net differential income from the lease alternative is

Answers

Answer:

$9,250

Explanation:

Calculation for the net differential income from the lease alternative

Lease amount=$45,000

Estimated expenses=$12,000

Net sale of equipment=Sale of equipment through broker $25,000 less 5% commission

Using this formula

Net differential income = Lease amount - estimated expenses - Net sale of equipment

Let plug in the formula

Net differential income= $45,000-$12,000-($25,000-($25,000*5%)

Net differential income=$45,000-$12,000-($25,000-$1,250)

Net differential income=$45,000-$12,000-$23,750

Net differential income=$45,000-$35,750

Net differential income=$9,250

Therefore net differential income from the lease alternative is $9,250

g A company issues 9% bonds with a par value of $170,000 at par on January 1. The market rate on the date of issuance was 8%. The bonds pay interest semiannually on January 1 and July 1. The cash paid on July 1 to the bond holder(s) is:

Answers

Answer:

$7,650

Explanation:

Calculation for the cash paid on July 1 to the bond holder(s)

Using this formula

Cash=Par value×Bonds percentage× Semiannual Interest

Semiannual means 6 months or half of the year.

Let plug in the formula

Cash=$170,000×0.09×1/2 year

Cash=$7,650

Therefore the cash paid on July 1 to the bond holder(s) will be 7,650

Eccles Inc. Eccles Inc., a zero growth firm, has an expected EBIT of $100,000 and a corporate tax rate of 30%. Eccles uses $500,000 of 12.0% debt, and the cost of equity to an unlevered firm in the same risk class is 16.0%. Refer to the data for Eccles Inc. What is the firm's cost of equity according to MM with corporate taxes? a. 25.9% b. 32.0% c. 28.8% d. 21.0% e. 23.3%

Answers

Answer:

b) 32%

Explanation:

Formula for calculating cost of equity is given as ;

r levered = r levered + ( debt / equity × ( r unlevered - cost of debt) × ( 1 - tax)

r unlevered is the cost of an unlevered equity = 16.0%

Debt = $500,000

Cost of debt = 12%

Equity = unknown

Firstly, we need to calculate the value of the firm and the formula is denoted by;

EBIT ( 1 - tax ) / Unlevered cost of equity + ( debt × tax )

= $100,000 ( 1 - 30% ) / 16% + ( $500,000 × 30% )

= $100,000 ( 0.7 ) /0.16 + $30,000

= $437,500 + $150,000

= $587,500

r levered = 16% + ( $500,000 / ( $587,500 - $500,000 ) × ( 16% - 12% ) × ( 1 - 30%)

= 0.16 + ( $500,000 / 87,500 ) × 0.04 × ( 0.7 )

= 0.16 + 5.71 × 0.04 × 0.7

= 32%

You purchased a share of stock for $120. One year later you received $1.82 as a dividend and sold the share for $136. What was your holding-period return

Answers

Answer:

Holding period return =14.85 %

Explanation:

The return on stock is the sum of the dividends earned and capital gains made during the holding period of the investment.

Dividend is the proportion of the profit made by a company which is paid to shareholders.  

Capital gains is another type of the return made on an equity investment as a result of increase in the value of the shares. It is difference between the cost of the share and the value at the time of disposal.

Therefore, we can can compute the return on the investment as follows:

Holding period return = (Dividend + capital gain)/Begin Price of stock × 100  

Dividend = $1.82

Capital gains= 136 - 120 = 16

Total dollar return on Investment = 1.82 + 16= $ 17.82

                                      = 17.82/120 × 100 = 14.85 %

Holding period return =14.85 %

Contemporary businesses have embraced leaner corporate hierarchies, simultaneously relying on teams, eliminating division walls, and blurring the lines of authority. As teams and managers are abandoning the traditional command structure, excellent persuasive skills are becoming ever more important at work.To be persuasive, you must be respectful and _________a. Authentic b. Commanding c. Blunt d. Authoritative How has persuasion changed in the digital age? a. All businesses are in the persuasion business b. Persuasion is more complex and impersonal c. Persuasive techniques are more subtle and misleading d. Persuasive messages are slow to engage audiences e. Persuasive messages are targeted to very specific audiences

Answers

Answers:

Option a: authentic.

Option A-E of the second question are all correct.they are the characteristics of Persuasion in this digital age.

Option a. All businesses are in the persuasion business

Option b. Persuasion is more complex and impersonal

Option c. Persuasive techniques are more subtle and misleading

Option d: Persuasive messages are slow to engage audiences

Option e. Persuasive messages are targeted to very specific audiences

Explanation:

In business, persuasion is the ability to influence others especially in decision making. Persuasive skills are essential at work as teams and managers leaves traditional command structure and focus instead on influencing others. An individual must be genuinely respectful and authentic that is they are people who are very intuitive and will know any effort to manipulate them. Using authority as a way to persuade does not generate respect. Instead of a blunt,commanding, pushy hard-sell approach, persuaders play on emotions by using flattery, empathy.

Persuasive techniques in the digital age are more subtle and misleading due to the fact that blunt, pushy hard-sell approach, persuaders play on emotions by using flattery, empathy, nonverbal cues, e. t. c which can be more subtle and misleading

Which of these inventory changes would be accounted for prospectively? Select one: a. FIFO to LIFO, but not LIFO to FIFO b. LIFO to FIFO, but not FIFO to LIFO c. Both FIFO to LIFO and LIFO to FIFO d. Neither FIFO to LIFO nor LIFO to FIFO

Answers

Answer: a. FIFO to LIFO, but not LIFO to FIFO

Explanation:

Well the inventory changes which would likely be accounted for is the FIFO ( first in first out system ) to LIFO ( last in first out system ). But not the LIFO ( last in first out )  to FIFO ( first in first out ). This system are mostly used in sales where for FIFO the first goods to arrive leaves first and for LIFO the opposite of FIFO

During December, Rainey Equipment made a $658,000 credit sale. The state sales tax rate is 6% and the local sales tax rate is 1.5%. Prepare the appropriate journal entry. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answers

So starting out they purchase your equipment with a promissory note. That promissory note is Debited to your accounts receivable for the amount of sales price (658,000) + both sales & local taxes. 6%+1.5%= 7.5% so... 1+ (7.5%*658,000)=  $707,350

then your sales tax payable is credited like this 7.5%*658,000= $49,350

and of course credit, the sales price for $658,000

Explanation:

Accounts Receivable                   $707,350 Sales Revenue                            $658,000               Sales taxes payable                         $49,350

Good luck!

#JmackTheInstructor

12-8. Dealerships for Subaru and other automobile manufacturers keep records of the mileage of cars they sell and service. Mileage data are used to remind customers of when they need to schedule service appointments, but they are used for other purposes as well. What kinds of decisions does this piece of data support at the local level and at the corporate level

Answers

Answer:

The Dealerships for Sabaru and other automobile manufacturers keeps records of the mileage of cars they sell and service due to various reasons. At the local level, it afford them the opportunity to know the car brand with the highest mileage being used by their customers.

Also, the ability to know the brand of car with least requirement for servicing. On the other-hand, at the corporate level, the records afford them the opportunity to know the automobile manufacturers which they will keep on trading with under dealership due to feedback from their customers.

Explanation:

The decisions that this piece of data supports at the local level and at the corporate level include the car that requires the least servicing.

From the complete information, it should be noted that the dealerships for Sabaru and other automobile manufacturers keep records of the mileage of cars they sell and service.

This can be pivotal in order to know the car brand with the highest mileage being used by their customers. Also, it's important to know the brand of car with the least requirement for servicing. At the corporate level, it's vital to know the automobile manufacturers that they'll continue trading with.

Read related link on:

https://brainly.com/question/17143538

As an initial transaction in a new margin account, a customer sells short 100 shares of ABC at $20 per share. After the customer deposits the appropriate margin, the credit balance in the account will be:

Answers

Answer:

$4,000

Explanation:

Regulation T initial margin to short stock is 50% of $2,000 = $1,500 . However, since this is a new account, it must meet the minimum initial margin of $2,000 required to open the account, hence $2,000 must be deposited.

Therefore, the credit balance in the account will be;

= 2,000 + 2,000 ( 100 × $20)

= $4,000

During the current year, Chudrick Corporation expects to produce 10,000 units and has budgeted the following: net income $300,000, variable costs $1,100,000, and fixed costs $100,000. It has invested assets of $1,500,000. The company’s budgeted ROI was 20%. What was its budgeted markup percentage using a full-cost approach?

Answers

Answer:

25%

Explanation:

For the computation of budgeted markup percentage using a full-cost approach first we need to find out the profit expected and total cost which is shown below:-

Profit Expected = $1,500,000 × 20%

= $300,000

Total cost = Variable cost + Fixed cost

= $1,100,000 + $100,000

= $12,00,000

Budgeted Markup Percentage = Profit ÷ Total Cost

= $300,000 ÷ $12,00,000

= 25%

good is excludable if: a. it is Wi-Fi or a similar service. b. people who do not pay cannot be easily prevented from using the good. c. one person's use of the good does not reduce the ability of another person to use the same good. d. people who do not pay can be easily prevented from using the good.

Answers

Answer:

The correct answer is:

people who do not pay can be easily prevented from using the good. (d)

Explanation:

Excludable goods or services are those to which the consumer cannot have access unless payment of some form is made. By contrast, a non-excludable good or service is one to which the consumer cannot be prevented from using even without payment. Excludable goods can be further divided into rivalrous and non-rivalrous.

A rivalrous excludable good or service is one in which usage by a consumer or usage by one party prevents or reduces significantly, its use by another consumer or party examples are goods such as clothes, food, cars etc, while non-rivalrous excludable goods/services include tv subscriptions, cinemas, etc.

Whispering Corporation began 2017 with a $94,200 balance in the Deferred Tax Liability account. At the end of 2017, the related cumulative temporary difference amounts to $352,400, and it will reverse evenly over the next 2 years. Pretax accounting income for 2017 is $505,400, the tax rate for all years is 40%, and taxable income for 2017 is $388,500.
Part 1
Compute income taxes payable for 2017.
Income taxes payable
$
Part 2
Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Account Titles and Explanation
Debit Credit
Part 3
Prepare the income tax expense section of the income statement for 2017 beginning with the line "Income before income taxes.". (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Answers

Answer:

1. Income tax payable = Taxable income for 2017 * Income tax rate

Income tax payable = $388,500 * 40%

Income tax payable = $155,400

2.                          Journal Entry

Account Titles and Explanations      Debit         Credit

Income tax expense                         $202,160

($505,400*40%)  

Deferred tax liability                                              $46,760

($202,160-$155,400)  

Income tax payable                                               $155,400

($388,500*40%)

3.                   Income Statement (Partial)

                   For the Year Ended Dec 31, 2017

Income before income taxes            $505,400

Income tax expense

Current           $155,400  

Deferred         $46,760                      $202,160

Net Income                                         $303,240

Unemployment numbers drop as more jobless Americans find positions in local businesses. Which determinant of aggregate demand causes the change

Answers

Answer: Consumer Spending

Explanation:

As more Americans find jobs, they will be able to earn an income. As they do so they will be able to spend more on goods and services in the economy thereby increasing Consumption spending which is the largest determinant of Aggregate Demand.

As a result of this increase in Consumption, Aggregate demand will change by increasing as well.

Lisa loaned $6,000 to her brother several years ago. In the current year, she determines that the loan is uncollectible. Lisa also has a $4,000 long-term capital gain in the current year from a stock sale. How much of the $6,000 loan can Lisa use/deduct in the current year g

Answers

Answer:

$0

Explanation:

Data provided in the question

Loaned amount several years ago = $6,000

Long term capital gain = $4,000

Based on the above information

Lisa is not in the position to subtract the loss from the loan i.e. uncollectible as according to the Internal revenue service (IRS) it is mentioned that if the loan is given to a brother the same is treated as a gift

So, the amount would be $0

On November 15, 20X3, Chow Inc., a U.S. company, ordered merchandise FOB shipping point from a German company for €200,000. The merchandise was shipped and invoiced on December 10, 20X3. Chow paid the invoice on January 10, 20X4. The spot rates for euros on the respective dates were

Answers

Answer:

$4,000 gain

Explanation:

Some information was missing:

the spot rates for euros were:

November 15, 20X3 $0.4955  per €1 December 10, 20X3 $0.4875  per €1December 31, 20X3  $0.4675  per €1January 10, 20X4 $0.4475  per €1

In Chow's December 31, 20X3, income statement, the foreign exchange gain is ?

the goods costed €200,000 x 0.4875 = $97,500 on December 10, 20x3

the goods costed €200,000 x 0.4675 = $93,500 on December 31, 20x3

Since the goods were sold FOB shipping point, we have to use the shipping date (December 10) to calculate the original price. By December 31, the price in US dollars had decreased by $4,000 resulting in a foreign exchange gain.

Johnson & Coleman has created a new line of premium quality writing desks. The company marketed the product by highlighting its durability and functionality. According to the VALS™ framework, to which of the following psychographic groups would the writing desk appeal the most?A. AchieversB. StriversC. ExperiencersD. Thinkers

Answers

Answer:

I believe the answer is d

Explanation:

Interviews are designed to determine if the employer feels a candidate is a good fit for the job. What benefit does an interview offer the job candidate

Answers

Explanation:

The job interview is a form of selection used by companies to select candidates for a job more effectively, because through it, the recruiter will meet the candidate in person, ask questions about issues related to his resume and his professional experiences , as well as the opportunity to analyze the way you communicate, your interests and your personality.

The advantage of the interview for the job candidate is to demonstrate your good intentions when occupying the job through an ethical, cordial posture and to have the opportunity to talk about some professional experiences that may be of interest to the employer and the company. It is also an opportunity for the candidate to clarify doubts about the responsibilities of the position and any other doubts related to the company or job function.

Which of the following costs should not be included in product costs for internal management reports that are used for decision-making?

Answers

Answer: d. Cost of organization sustaining activities

Explanation:

Organization sustaining activities are those undertakings that have to be made if a company can keep operating. Examples include; property taxes, insurance, information filing with Government agencies and etc.

These activities are therefore not directly linked to the production process as they are not related to a single product and so should not be included in product costs for internal management reports which will be used for decision-making.

On January 1, Power House Co. prepaid the annual rent of $10,140. Prepare the journal entry to record this transaction.

Answers

Answer and Explanation:

The journal entry to record the given transaction is shown below:

Prepaid rent Dr $10,140

          To Cash $10,140

(Being the prepaid annual rent paid in cash is recorded)

For recording this we debited the prepaid rent as it increased the assets and credited the cash as it reduced the cash so that the proper posting could be done  

What is the expected yield on the market portfolio at a time when Treasury bills are yielding 6%, and a stock with a beta of 1.5 is expected to yield 18%

Answers

Answer:

8%

Explanation:

According to CAPM :

expected stock yield =risk free rate + (beta x market yield)

6% + 1.5 x market yield = 18%

18% - 6% = 1.5market yield

solving for market yield gives

market yield = 8%

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