1. Asset Return Liabilities & Equity Return ...

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Accounting

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 12%

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) ?

Equity B 13,500 13%

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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