Mulherin's stock has a beta of 1.2, its required return is 10%, and the risk-free rate is 4%. What is the required rate of return on the market? ( %, Hint: First, find the market risk premium.)

9%

Explanation:

The formula is Ra=Rf+(Rm-Rf)Ba

Ra=10%

Ba=1.2

Rf=4%

Rm=?

Ra=Rf+(Rm-Rf)*Ba

10%=4%+(Rm-4%)*1.2

10%=4%+1.2Rm-4.8%

10%+4.8%=4%+1.2Rm

14.8%-4%=1.2Rm

Rm= 10.8%/1.2

Rm=9%

Depreciation for 6 months ending June 30, 2016 is $ 5,000 and the accounting entry to record the transaction is:

Depreciation Expense  - Debit                    $ 5,000

Allowance for Depreciation  - Credit           $ 5,000  

Explanation:

The depreciation charge for the year is calculated as follows:

Total cost of the equipment                             $ 55,000

Salvage Value                                                    $  5,000

Net Depreciable value                                      $  50,000

Estimated Useful Life                                           5 years

Annual Depreciation expense(50000/5)         $ 10,000

Depreciation for 6 months (10000/2)               $ 5,000