Question: 1. Asset Return Liabilities & Equity Return Asset A $10,000 ? Liability $1,000 8% Asset B 2,000 6% Equity A 2,000 4% Equity B 9,000
1.
| Asset Return | Liabilities & Equity Return |
| Asset A $10,000 ? | Liability $1,000 8% |
| Asset B 2,000 6% | Equity A 2,000 4% |
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| Equity B 9,000 12% |
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Calculate the return on Asset A as the weighted average of the returns on the other financial instruments? 4 marks. What is the weight attached to Asset B? 2 marks.
b.
8 marks
| Asset Return | Liabilities & Equity Return |
| Asset A $10,000 15% | Liability $1,000 8% |
| Asset B 2,000 6% | Liability D (2,500) ? |
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| Equity B 13,500 13% |
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Calculate the return on Liability D as the weighted average of the returns on the other financial instruments? 4 marks. What is the weight attached to Asset A? 2 marks. Is Liability D really a liability? Explain. 2 marks.
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