# Eaton electronic company’s treasurer uses both the capital asset pricing model and the dividend valuation model to compute the cost of common equity (also referred to as the required rate of return for common equity). assume: rf = 6 % km = 9 % β = 1.8 d1 = \$ .90 p0 = \$ 19 g = 5 % a. compute ki (required rate of return on common equity based on the capital asset pricing model).

Aprice ceiling is â€śbindingâ€ť if the price ceiling is set below the equilibrium price. suppose that the equilibrium price is \$5. if a price ceiling is set at \$6, this will not affect the market in any way since \$5 remains a legally allowable price (since \$5 < \$6). a price ceiling of \$6 is called a â€śnon-bindingâ€ť price ceiling. on the other hand, if the price ceiling is set at \$4, the price ceiling is â€śbindingâ€ť because the natural equilibrium price is \$5 but that is no longer allowed. what happens when there is a binding price ceiling? at a price below the equilibrium price, quantity demanded exceeds quantity supplied. there is a shortage. normally, price increases eliminate shortages by increasing quantity supplied and decreasing quantity demanded. in this case, however, price increases are not allowed past the price ceiling. we therefore predict that the observed market price will be right at the price ceiling and there will be a permanent shortage. the observed quantity bought and sold will be dictated by the quantity supplied at the price ceiling. although consumers would like to buy more, there are no more units for sale
Jamie is saving for a trip to europe. she has an existing savings account that earns 3 percent annual interest and has a current balance of \$4,200. jamie doesn’t want to use her current savings for vacation, so she decides to borrow the \$1,600 she needs for travel expenses. she will repay the loan in exactly one year. the annual interest rate is 6 percent. a. if jamie were to withdraw the \$1,600 from her savings account to finance the trip, how much interest would she forgo? .b. if jamie borrows the \$1,600 how much will she pay in interest? c. how much does the trip cost her if she borrows rather than dip into her savings?
Which of the following statements about revision is most accurate? (a) you must compose first drafts quickly (sprint writing) and return later for editing. (b) careful writers always revise as they write. (c) revision is required for only long and complex business documents. (d) some business writers prefer to compose first drafts quickly and revise later; others prefer to revise as they go.