What is the difference of Cost of Equity and the required rate of return on equities?

Q: Lucy bought a house for $100,000. Lucy's annual cost of ownership net of tax savings is exactly equa...

A: Cost of House  $1,00,000.00 LTV 80% Buying Cost  5% Selling Cost 8% Annual Growth rate 4.50%

Q: A mortgage balance of $25,000 is to be repaid over a 10-year term by equal monthly payments at 5.6% ...

A: Here, Mortgage balance = $25,000 Term = 10 years Rate of interest = 5.6% compounded semi-annually Mo...

Q: What is the project's IRR?

A: Internal Rate of Return (IRR) is defined as the minimum rate of return that gives zero valuation to ...

Q: yeild to maturity using t.

A: Yield to maturity represents the rate of return on the value of the bond while assuming the investor...

Q: Suppose you take out a loan for 180 days in the amount of $11,500 at 14% ordinary interest. After 60...

A: Loan amount (PV) = $11500 Interest rate (r) = 14% Period (n) = 180 days First payment amount (P) = $...

Q: Big Rock has several investment portfolios with a local mutual fund company. One of the company’s di...

A: Sharpe ratio is calculated by dividing the difference of return on asset with risk free return by st...

Q: Are these defensive or aggressive in nature Weight on PG Weight on F Portfolio Return Portfolio Bet...

A: Generally, aggressive portfolios have betas greater than 1 while defensive portfolios have betas les...

Q: Fatimah pays monthly rent of $520 for her townhouse. If she bought the property, the mortgage loan, ...

A: When a series of deposits or payments are made of equal amounts at equal intervals of time, it is ca...

Q: Helene invests R5918 in a savings account that pays interest at 6% pa compounded monthly. Exactly 5 ...

A: Invested amount (X) = R 5918 r = 6% monthly compounded = 0.5% per month for n = 5 years (60 months) ...

Q: Indicate the effects of the transactions listed, on current assets, current ratios and net income. ...

A: Fixed assets are those assets which are being held by the business for longer period of time. For ex...

Q: Dark Creek Corporation's CEO is selecting between two mutually exclusive projects. The company is ob...

A: Here, Pay off in Bad Economy in High Volatility is $2,900 Payoff in Good Economy in High Volatility ...

Q: A business is increasing by 10% for 8 years. If the sales in year 1 is $ 22,000, what is the present...

A: Present value = sum of present value of all sales figures for years 1 to 8. This can be treated as a...

Q: Mrs. Go make deposits that forms a geometric gradient that increases at 6%per month for 1 year. She ...

A: Annuity represents the equal payments made constantly and gradient for annuity shows the constant in...

Q: please solve by hand instead of using excel. thank you! 3. Use an external investing rate of 12% and...

A: Rate of return shows the net amount earned over the invested amount in percentage terms. It is compu...

Q: Suppose you plan to go on a dream vacation for your anniversary in 7 years from today and you plan t...

A: We need to use future value of ordinary annuity formula to calculate monthly payment to reach goal. ...

Q: Asa Khumalo purchased a vehicle to the value of R224987 today and expects to make repayments for the...

A: Mortgage (X) = R 224987 n = 7 years = 84 months r = 12% per annum = 1% per month Let M = Initial mon...

Q: Find the present value of a perpetuity of P15,000 payable semi-annually if money is worth 8% compoun...

A: A perpetuity is a series of continuous payments made at regular intervals. It can also be understood...

Q: A group of engineers formed a corporation and the opportunity to invest P8,000,000. Their plan is to...

A: A capital budgeting project is one in which a huge amount of funds are invested. They are generally ...

Q: A few years ago, Big Rock invested in a number of bonds with various maturity dates. Several of thes...

A: A bond is a fixed-income instrument that reflects a loan from an investor to a borrower (usually cor...

Q: Use the compound interest formula to compute the balance in the following account after the stated p...

A: We need to use compound interest formula to calculate balance in the account after 14 years A =P(1+i...

Q: The selling price of the preference shares is P150. the business is subject to a 30% income tax rate...

A: The cost of preference share = Annual dividend/Current price of the share Annual dividend = Par valu...

Q: what are the key characteristics of active fund management and passive fund management, focusing on ...

A: The key characteristics of active fund management is the frequent buying and selling in an attempt t...

Q: * Shara Jane Mariano buys a 137,000 laundry business by paying 26,000 at the end of each year. At 8%...

A: The amortization table means a table showing the schedule of payments in each period including the i...

Q: to determine the regular payment amount, rounded to the nearest dollar. Consider the following pair ...

A: Mortgage is a value which is taken from external sources for a specific period. This amount is repai...

Q: As a financial manager you are very concerned about the dividend yiled and dividend payout ratioas t...

A: Stock price is defined as the maximum price that an investor is willing to pay for a stock. These pr...

Q: Ex. You anticipate a tuition liability of $40,000 per year at the end of 3 and 4 years from now. Wha...

A: Here, Tuition Liability in Year 3 and 4 is $40,000 Current Market Interest Rate is 8%

Q: Lucy bought a house for $100,000. Lucy's annual cost of ownership net of tax savings is exactly equa...

A: IRR of a project is the rate of return at which the net present value of the project becomes zero. T...

Q: Small businesses use approach(es) like it/they entail(s) minimal investment & risk. * ; due to that ...

A: Since you have asked multiple question, we will solve the first question for you. If you want any sp...

Q: If only some investors perform security analysis while all others hold the market portfolio, would t...

A: The Capital Market Line (CML) is a subset of the CAL, which is the line that depicts an investor's r...

Q: A bank originates a 30 year Fully Amortizing FRM at an annual interest rate of 5% with monthly compo...

A: Here, Interest earned by Bank on FRM is 5% Interest Paid by Bank on Borrowings is 6%

Q: An initial investment amount P, an annual interest rate r, and a time t are given. Find the future v...

A: Since you have posted a question with multiple sub-parts, we will solve first three subparts for you...

Q: On January 1, 2020, the company issued $2,500,000 6% bonds with a 10-year maturity. The bonds were i...

A: Solution:- We know, Present Value of a bond = Present value of benefits receivable from bond discoun...

Q: A special power tool for plastic products costs $400,000 and has a four-year useful life, no salvage...

A: The period in which the cost of asset including working capital investment is fully recovered from t...

Q: n item is 10000, payable in 10 days but if paid in 30 days there will be a P30 discount. Find the ra...

A: Simple interest = Principal * rate* time (n).

Q: 1.5 Mr Mol plan investment with a months plus an additional N$2000 at the end of 240 months. Dete th...

A: A bond is defined as the financial instrument that is used to raise capital from the market at a sta...

Q: LO 3 8. Calculating IRR What is the IRR of the following set of cash flows? Year Cash Flow $19,400 -...

A: Year Cash flow 0 -19400 1 10400 2 9320 3 6900

Q: Unequal Lives The Perez Company has the opportunity to invest in one of two mutually exclusive mach...

A: As per the information provided : Initial cost of Machine A - $10 million After-tax inflows - $4 mil...

Q: eavy Metal Corporation is expected to generate the following free cash flows over the next five​ yea...

A: Enterprise value will be the sum of present value all free cash flows and present value of terminal ...

Q: Cash Conversion Cycle. Will each of the following events increase or decrease cash conversion cycles...

A: Cash conversion cycle represent the number of days taken by the company to convert its goods into ca...

Q: ange rates between the USD and CAD, AUD, and BRL respectively are 1.20, 0.90, and 1.40 respectively ...

A: Real effective exchange rate is based on the overall exchange rate based on trade between the countr...

Q: A retail kiosk has listed a pair of sunglasses for $136 less 30%. A department store in the shopping...

A: List price of a good is the price demanded by the supplier. It is the price advertised in the catalo...

Q: E7. A South American country has had a high rate of inflation. Recently, its exchange rate was 15 cr...

A: Current spot rate (S0) = 15 cruzados per dollar South American country inflation rate (i1) = 26% US ...

Q: A bond has a $13,000 face value, a 6-year maturity, and a 3.05% coupon. Find the total of the intere...

A: Face value= $13000 Number of interest payments = 6 Coupon rate = 3.05%

Q: Shi Import-Export's balance sheet shows $300 million in debt, $50 million in preferred stock, and $2...

A: Weighted Average Cost of Capital (WACC) is defined as the minimum rate that is needed to be earned t...

Q: Electric-powered forklift truck   Gas-powered forklift truck NPV $              $            IRR   %...

A: Net Present Value (NPV) is defined as the value that can be arrived at by subtracting the present va...

Q: What is the value today of receiving $5,000 at the end of each year for the next two years, assuming...

A: SOLUTION : GIVEN, Annual payment = $5,000 Interest rate = 10% = 0.10  Number of years = 2 years    N...

Q: A manufacturer wants to introduce new factory equipment that requires machinery to be purchased toda...

A: First cost (F) = $120 million n = 5 years Annual benefits = $47 million Annual costs = $9 million r ...

Q: Central Staircase is offering preferred stock which is commonly referred to as 10-10 stock. This sto...

A: The stock price is calculated as discounted value of cash flows

Q: their payment every year. Compute the annual payment to settle their debt if the rate of interest is...

A: A stream of equal cash flows paid or received periodically is termed as annuity. Annuity is either r...

Q: A company produces a certain commodity. The labor and material cost for each item produce is P112. O...

A: Given: Fixed cost = P316,000 Selling price = P425 Variable cost = P112 Other variable cost =P67