Calculate the opportunity cost of capital

Assignment Help Accounting Basics
Reference no: EM133041090

Question - A share of stock with a beta of 0.83 now sells for $61. Investors expect the stock to pay a year-end dividend of $3. The T-bill rate is 6%, and the market risk premium is 9%. Suppose investors believe the stock will sell for $63 at year-end. Calculate the opportunity cost of capital. Is the stock a good or bad buy? What will investors do?

Reference no: EM133041090

Questions Cloud

Proposed development and possible impacts : EIA is as much a social process as a means of collecting physical information about the proposed development and possible impacts
How would you reflect this on the balance sheet : According to FASB statement no. 160, how would you reflect this on the balance sheet? If he or she sells 8% of the shares
What are the competitive advantages of visa : What are the competitive advantages of Visa so that it becomes a global payments powerhouse? Using value chain analysis
Discuss the effectiveness of the sampling designs : A research company obtains a sample for a focus group through organized groups such as church groups, clubs, and schools. The organizations are paid for securin
Calculate the opportunity cost of capital : Suppose investors believe the stock will sell for $63 at year-end. Calculate the opportunity cost of capital. Is the stock a good or bad buy
Exploration of emotions and experiences : -Facilitate a structured debriefing following a stress-related incident in which colleagues requiring additional support.
Earliest examples in human history : Describe the evolution in how crime was believed to manifest in individuals from the earliest examples in human history all the way up Positivism.
Identify the business position in the market : Choose a Fast-moving consumer goods (FMCG) company in Bangladesh Company background and analyze its business position. report must be prepared according to the
How much of the profit is allocated to Ms Lee : Ms. Lee's salary is $25,000; Mr. Wan's salary is $20,000. How much of the profit is allocated to Ms. Lee

Reviews

Write a Review

Accounting Basics Questions & Answers

  What was the gain or loss on the sale of the equipment

Lawler Clothing sold manufacturing equipment for $16,000. Lawler originally purchased the equipment for $80,000, and depreciation through the date of sale totaled $71,000. What was the gain or loss on the sale of the equipment?

  What is the firm weighted average cost per equivalent unit

A firm has 10,000 units of beginning in-process inventory. The direct materials costs spent on those units so far are $1,000.

  Determine the gain or loss on the sale of the equipment

Assuming that the equipment was sold at the end of the second year for $230,400, determine the gain or loss on the sale of the equipment

  How much will acquirer record as goodwill

Acquirer Corporation purchases all of Target Inc. stock for $60 per share. How much will Acquirer record as goodwill upon acquiring Target

  What was the balance in Unearned Revenue at December

If $1,600 was received in January for services performed in January, what was the balance in Unearned Revenue at December 31, 2010

  What is the conversion cost of normal spoilage

What is the conversion cost of normal spoilage? (FIFO and Average Method respectively). units completed and transferred out 1,700 units

  How many baby cribs need to be sold in order to break even

Sweet Baby Inc. produces two types of children's specialty bed products - Baby Cribs and Toddler Beds. How many baby cribs need to sold in order to break even

  Discuss the outstanding receivables

the outstanding receivables. The amount of the adjusting entry to record uncollectible accounts expense is

  Prepare total and balance the journals as required

Prepare the Income Statement for the period ended 31 January 2018 on the template provided. Prepare a Bank Reconciliation Statement as at 31 January 2018

  Composite depreciation presented below is information

Prepare the entry to record the sale of Asset D for cash of $5,000. It was used for 6 years, and depreciation was entered under the composite method.

  Calculate Wyatt net income from employment

Wyatt Harris worked for RET Co. From March 1st to December 31st during 2020. Calculate Wyatt net income from employment

  When a plant asset is retired from productive service

When a plant asset is retired from productive service, (without any sale) that originally cost $100,000 and had accumulated depreciation of $80,000, the correct accounting treatment is what?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd