On January 1, 1991, you are considering the purchase of ABC Company's common share. You have collected the following information on ABC Company:1.Book value for common share on January 1, 1991 is $13per share.2.Predicted net income for 1991 is $2per share and net income is expected to increase by 10% every year through 1995. 3.ABC is expected to pay $0.5dividends per year from 1991 to 1995.4.After 1995, abnormal earnings will grow by 5% per year.5.ABC's beta is1.2. The risk-free rate of return is6.6% and the market risk premium is 7%. You should use the CAPM model to estimate the equity cost of capital for ABC Company. Required:Using the abnormal earnings formula, compute the estimated equity value per share of ABC Company onJanuary 1, 1991.Your answers must show the steps of computations for any credits. Problem 2 (2 points)Use the stock return data of Walmartand Cisco to estimate their betas. The monthly return data is available in Blackboard.

Paar corporation bought 100 percent of kimmel, inc., on january 1, 2012. on that date, paar’s equipment (10-year life) has a book value of $420,000 but a fair value of $520,000. kimmel has equipment (10-year life) with a book value of $272,000 but a fair value of $400,000. paar uses the equity method to record its investment in kimmel. on december 31, 2014, paar has equipment with a book value of $294,000 but a fair value of $445,200. kimmel has equipment with a book value of $190,400 but a fair value of $357,000. the consolidated balance for the equipment account as of december 31, 2014 is $574,000. what would be the impact on consolidated balance for the equipment account as of december 31, 2014 if the parent had applied the initial value method rather than the equity method? the balance in the consolidated equipment account cannot be determined for the initial value method using the information given. the consolidated equipment account would have a higher reported balance. the consolidated equipment account would have a lower reported balance. no effect: the method the parent uses is for internal reporting purposes only and has no impact on consolidated totals.

Archangel manufacturing calculated a predetermined overhead allocation rate at the beginning of the year based on a percentage of direct labor costs. the production details for the year are given below. calculate the manufacturing overhead allocation rate for the year based on the above data. (round your final answer to two decimal places.) a) 42.42% b) 257.14% c) 235.71% d) 1, 206.90% archangel production details.

Security a has a higher standard deviation of returns than security b. we would expect that: (i) security a would have a risk premium equal to security b. (ii) the likely range of returns for security a in any given year would be higher than the likely range of returns for security b. (iii) the sharpe ratio of a will be higher than the sharpe ratio of b. (a) i only (b) i and ii only (c) ii and iii only (d) i, ii and iii