Bentonville High School’s student council is planning a fundraiser. A local coffee shop has agreed to make a flat donation of $500 and also give a percent of their total sales over a specified weekend. The total donation can be modeled by the function rule D(s) = 500 + 0.05s, where s represents the total sales at the coffee shop during the fundraising weekend in dollars. Find the value of D(2750), showing your work. What does this quantity mean in the context of the problem situation?

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%