Haulsee Inc

question 72

Multiple Choice

Haulsee Inc.pays no dividend currently but is expected to start paying a small dividend next year.The 5-year old firm has a beta of 1.25 and current earnings of $0.90 per share.The current Treasury bill rate is 6.10% and the market risk premium is 8.8%.Determine Haulsee's cost of equity if the firm's tax rate is 40%.

• A)9.48%
• B)17.1%
• C)14.9%
• D)cannot determined from the information provided

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Definitions:

Budgeted Volume

The anticipated quantity or amount of sales, production, or activity planned for a future period.

Ending Inventory

The value of goods available for sale at the end of an accounting period.

Expected Sales

Forecasted or projected revenue figures estimated from future sales over a specific period.

Flexible Budgeting

A budgeting process that allows for adjustments to budgetary allocations based on changes in actual performance, revenue, or other factors.