1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
pishuonlain [190]
2 years ago
11

An industry has three firms with unlevered betas of 0.7, 1.1, and 1.6. What is the discount rate to use for an unlevered firm th

at wants to enter this industry if the risk-free rate is 3 percent and the expected return on the market is 17 percent
Business
1 answer:
lozanna [386]2 years ago
7 0

18.9%

Finding a company's cost of capital is crucial in corporate finance for a few key reasons. For illustration, a corporation might calculate its net present value using the WACC discount rate. A lower WACC typically denotes a healthy company that can draw investors at a reduced cost. The industry has three firms with un levered betas of 0.7, 1.1, and 1.6.  the discount rate to use for a un levered firm that wants to enter this industry is 18.9% if the risk-free rate is 3 percent and the expected return on the market is 17 percent

The WACC discount formula is: WACC = E/V x Ce + D/V x Cd x (1-T)
To learn more about WACC please refer to -brainly.com/question/14223809
#SPJ4

You might be interested in
What is the most credible website or webpage you have ever visited? Why is it so credible? Describe some of the qualities that m
vovangra [49]
I'm not sure, but easybib is very good at finding credible sources. Steer clear of websites like wikipedia when making research papers, and .com websites, or bias websites.
7 0
4 years ago
Read 2 more answers
Which of the following statements is CORRECT? a. If a company follows a policy of "matching maturities," this means that it matc
Butoxors [25]

Answer: d. Although short-term interest rates have historically averaged less than long-term rates, the heavy use of short-term debt is considered to be an aggressive strategy because of the inherent risks associated with using short-term financing.

Explanation:

Using short term financing is generally considered to be an aggressive strategy and is more often than not frowned upon by investors.

This is because of the reputational risk involved. A company that keeps using short term financing gives off the impression that it is barely keeping afloat and therefore relying on short term loans to continue functioning.

Other risks involved include, short term loans are usually given in small quantities so they cannot be used effectively as they will bareky go anywhere in terms of investment and their payback installment schedule can be in weeks instead of months like long term financing which can be detrimental to survival.

This is as opposed to a Conservative Approach that uses long term financing to finance most of it's Working Capital.

7 0
4 years ago
How can you determine an independent contractor?
nika2105 [10]

Answer:

B.

Explanation:

7 0
3 years ago
Read 2 more answers
Materials used by Square Yard Products Inc. in producing Division 3's product are currently purchased from outside suppliers at
sammy [17]

Answer:

Increase in income from Operations = $72,000

Explanation:

Current cost of purchasing the inventory = $5 per unit.

Purchase price if bought from Division 6 = $3.20

Net benefit on each unit = $5 - $3.20 = $1.80

Number of units purchased = 40,000

Net savings in Expense of purchase of raw material, which will result in increase in income from operation's by = 40,000 \times $1.80

= $72,000.00

4 0
4 years ago
When a consumer makes a purchase of a particular product...
noname [10]

Answer:

The consumer decision process is composed of problem recognition, search, evaluation, and purchase decision. Post-purchase behavior is the result of satisfaction or dissatisfaction that the consumption provides. The buying process starts when the customer identifies a need or problem or when a need arises.

Complex buying behavior.

Dissonance-reducing buying behavior.

Habitual buying behavior.

Variety seeking behavior.

Explanation:

8 0
3 years ago
Other questions:
  • If the supply of a product decreases and the demand for that product simultaneously increases, then equilibrium: price must rise
    10·1 answer
  • Which of the following entries would be made to record $20,800 of labor-80% of which is direct, and 20% of which is indirect-to
    11·1 answer
  • For accounting information to be relevant, the information should ______. (Select all that apply.)
    9·1 answer
  • Mckenny, inc manufactures and sells two products: produc P9 and product X2. data concerning the expected production of each prod
    6·1 answer
  • You are leading your organization's effort to purchase and install new accounting software. The project will cost an estimated $
    15·1 answer
  • Can someone write a speech for me?
    11·1 answer
  • Plastics, Inc. and Joe's Canoe Shack both operate businesses located on the river. Plastics, Inc. dumps pollution into the river
    11·1 answer
  • On January 1, 2017, Smeder Company, an 80% owned subsidiary of Collins, Inc., transferred equipment with a 10-year life (six of
    15·1 answer
  • Cedric Company recently traded in an older model of equipment for a new model. The old model’s book value was $252,000 (original
    8·1 answer
  • In the Soviet union, what was a collective
    10·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!