Your business makes custom baby quilts. you plan to sell your quilts online and have a choice of two web companies that you can sell your quilts through. company a charges an online store fee of $75 per month plus 10% of your sales. company b charges you 12% of your sales but no monthly fee. if you sold $3,750 per month, which company would be the best deal?

b

step-by-step explanation:

required rate of return = 0.166 = 16.6%

step-by-step explanation:

under the capital asset pricing model (capm), the required or expected rate of return for a particular security or asset is given using the formula:

required rate of return = risk-free rate + beta*(market risk premium)

we are given that;

risk-free rate = 4% = 0.04

beta = 1.4

market risk premium = 9% = 0.09

we simply plug these values into the above formula;

required rate of return = 0.04 + 1.4*(0.09)

required rate of return = 0.04 + 0.126

required rate of return = 0.166 = 16.6%