In a classic​ prisoners' dilemma​ example, Larry and​ Duncan, possible​ criminals, will get one year in prison if neither​ talks

Answer:

The equity cost will be 10.93 %

Thus, option (E) is correct

Explanation:

The given risk-free return is

Market risk premium RPM = 5.25 % = 0.0525

We will calculate the cost of equity from reinvested earnings, denoting the cost of equity

Cost of equity is calculated as

Cost of equity = risk-free rate +

= 0.0410 + 1.30 x 0.0525 = 0.10925 = 10.93 %

So option (E) is the correct choice

Answer:

See below

Explanation:

1.

Actual manufacturing overhead costs incurred

$473,000

Subtract applied manufacturing overhead costs $25 × 19,400

($485,000)

Over-applied overhead

$12,000

2.

Beginning raw materials

$20,000

Plus raw materials purchased

$400,000

Raw materials available for use

$420,000

Minus ending raw materials

($30,000)

Raw materials utilized in production

$390,000

Less indirect materials

($15,000)

Add direct labor costs

$60,000

Add applied manufacturing overhead

$485,000

Total manufacturing costs

$920,000

Add beginning work in process inventory

$40,000

Total work in process inventory

$960,000

Less ending work in process

($70,000)

Cost of goods manufactured.

$890,000

Answer:

According to put-call parity, the anticipated share price is $31.95.

Explanation:

Given values:

share price = $31.63

yearly dividend = $1.50 per year

strike price = $27

call price = $6.10

put price = $2.65

expiry duration = 1 year

Solution:

Put-Call Parity expresses the price relationship between a put option, a call option, and the underlying stock.

We will apply the fundamental put-call parity formula, which states:

Po + So = Co + (D + X × ...................1

In this equation, Po is the put option, Co is the call option, X is the strike price, So is the stock price, and D represents dividend, which is 0 in this case.

This means the stock price can be calculated as:

So + Po = Co + D + X

So + $2.65 = $6.10 + $1.5 + $27

So = $31.95

Thus, the predicted share price in accordance with the put-call parity is $31.95.

Answer:

The financial drawback amounts to 138,600.

Explanation:

The allocated and depreciation costs are inevitable and thus should be regarded as expenses for the purchase option.

Additionally, any income from the extra segment is applicable only to the purchase option.

The avoidable costs include:

Direct Materials

Direct Labor

Variable overhead

Supervisor's salary

These costs are absent in the purchase scenario.