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1 year ago

He wacc is the appropriate discount rate for use with projects but should be adjusted for higher risk ones

1 answer:

8 0

The WACC is the appropriate discount rate for use with average projects but should be adjusted upward for higher-risk ones.

Securities analysts may use WACC when evaluating the value of investment opportunities. For example, in discounted cash flow analysis, as a discount rate for future cash flows, he can apply WACC to derive the net present value of the firm.

Using the WACC discount rate makes the present value of investment appear higher than it actually is.

Businesses typically use the weighted average cost of capital (WACC) as the discount rate. This is to take into account the rate of return expected by shareholders. DCF has limitations. Primarily, it relies on estimates of future cash flows that may be inaccurate.

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Julie evaluated her spending and found that she was spending about $75 more per month on transportation than she has bodgeted Sh

o-na [289]

Answer:

Julie

The percent of her monthly income that will be budgeted for transportation is:

= 13%.

Explanation:

a) Data and Calculations:

Amount budgeted for transportation = $175

Amount being spent on transportation = $250

Total monthly income = $1,900

Percentage of monthly income that will be budgeted for transportation = $250/$1,900 * 100

= 13.16%

= 13.2%

= 13%

Percentage of monthly income earlier budgeted for transportation = 9% ($175/$1,900 * 100)

The additional spending on transportation represents 4% ($75/$1,900 * 100)

New percentage spending on transportation = 13% (9% + 4%)

6 0

3 years ago

Understanding opportunity cost

vaieri [72.5K]

Answer:

D.$24

Explanation:

Opportunity cost: The opportunity cost is that cost which gives the best alternative option

The computation of the total cost is shown below:

= Earning per hour + admission fee

= $15 per hour + $9

= $24

Since the question is asking for the total cost, so we consider both the costs i.e earning per hour and admission fee.

8 0

3 years ago

Pam Corporation holds 70 percent ownership of Spray Enterprises. On December 31, 20X6, Spray paid Pam $31,000 for a truck that P

Temka [501]

Answer:

the worksheet consolidation entry or entries needed on December 31, 20X6 would be the following:

Debit Credit

Gain on Sale $7,000

truck $5,000

Accumulated Depreciation $12,000

Explanation:

In order to prepare the worksheet consolidation entry or entries needed on December 31, 20X6, to remove the effects of the intercompany sale we would have to make first the following calculations:

Gain on Sale=$31,000-($36,000-(($36,000/15)×5))

=$7,000

Accumulated Depreciation=($36,000/15)×5

=$12,000

Hence, truck=$12,000-$7,000

=$5,000

Therefore, the worksheet consolidation entry or entries needed on December 31, 20X6 would be the following:

Debit Credit

Gain on Sale $7,000

truck $5,000

Accumulated Depreciation $12,000

5 0

3 years ago

Read 2 more answers

7 Houseman, Inc. anticipates sales of 60,000 units, 58,000 units, 61,000 units and 60,000 units in July, August, September and O

elixir [45]

Answer:

60,500 units

Explanation:

Data provided in the question:

Month sales

July 60,000 units

August 58,000 units

September 61,000 units

October 60,000 units

Ending inventory = 50% of the following month's sales

Now,

Total inventory required in September

= Sales in September + Ending inventory of September

= 61,000 units + 50% of sales in October

= 61,000 units + ( 0.50 × 60,000 )

= 61,000 units + 30,000 units

= 91,000 units

Number of units to be produced in September

= Total inventory required in September - Ending inventory of August

= 91,000 units - ( 50% of 61,000 )

= 91,000 units - 30,500 units

= 60,500 units

3 0

4 years ago

The model of monopolistic competition characterizes the market for plumbing services in a city. This market is initially in long

Sophie [7]

Answer:

There will zero economic profits in the long run.

Explanation:

Monopolistic competition is a market structure where there is a large number of firms producing differentiated products. There is very low or no restriction on the entry and exit of firms in the market.

The market for plumbing services in a city is a monopolistic competition. An increase in the market demand will cause the price to increase. This will cause an increase in the profits of the existing firms.

In the long run, new firms will enter the market, increasing the market supply. This will cause the price level to decrease till all the firms are having zero economic profits.

3 0

4 years ago

He wacc is the appropriate discount rate for use with ______ projects but should be adjusted ______ for higher risk ones

He wacc is the appropriate discount rate for use with projects but should be adjusted for higher risk ones