All categories

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.

Learn more about WACC at

brainly.com/question/25566972

#SPJ4

You might be interested in

At the beginning of June, Rhone Company had two jobs in process, Job 44 and Job 45, with the following accumulated cost informat

SVETLANKA909090 [29]

Answer:

1. Overhead rate based on direct labor cost = 65%

2. Brief job-order cost sheet for the four jobs is attached with this question please find it.

Work in process = $13,356

Finished Goods = $3,434

Cost of Goods Sold = $24,127

Explanation:

Job 44 Job 45

Direct materials $5,100 $1,500

Direct labor 1,200 3,000

Applied overhead 780 1,950

Balance, June 1 $7,080 $6,450

Job 44 Job 45 Job 46 Job 47

Direct materials $2,200 $7,150 $1,850 $1,700

Direct labor $900 $6,380 $960 $540

1. Over head Rate = Applied overhead / direct labor = (780/1200) x 100= 65%

3. Work in process (Job 44 & 47) = $10,765 + $2,591 = $13,356

Finished Goods (Job 46) = $3,434

4. Cost of Goods Sold (Job 45) = $24,127

4 0

3 years ago

Suppose a project is subject to the following risk events (each with a given probability of occurring and a cost associated with

gulaghasi [49]

Answer :

Correct answer is Option (e)

Explanation :

As per the data given in the question,

Option (e) is the correct answer, which indicates that Event 2nd should probably get the most attention and Event 3rd should probably get the least.

The reason behind it is Event 2nd has the highest probability of occurrence at 0.6 and cost associated with it is also the greatest at $54,000. Event 3rd has the least probability of occurrence at 0.1 and the cost associated with its occurrence is also the smallest at $12,000.Therefore this Event should be given least importance.

5 0

3 years ago

An increase in the degree a good is liked (the increase in the taste for a good) would

In-s [12.5K]

Answer:

Increase demand

Explanation:

Tastes and preferences of the consumers is one of the determinant of demand that would shift the demand curve rightwards or leftwards.

Now, if there is an increase in the taste of the consumers for a good then as a result this would increase the market demand for that particular good. This would also shifts the demand curve of that good rightwards.

If there is a positive change in the taste of the consumers for a good then they will buy more quantity of that good.

4 0

3 years ago

Which statement best describes capitalism

amm1812

An economic and political system in which a country's trade and industry are controlled by private owners for profit rather than by state. {This is what the dictionary said by the way}

3 0

3 years ago

The Vintage Laundry Company purchased $6,500 worth of laundry supplies on June 2 and recorded the purchase as an asset. On June

Mazyrski [523]

Answer:

D.) debit Supplies Expense. $5,500; credit Supplies, $5,500

Explanation:

First, let's talk about the amount.

On June 2 they purchased supplies worth $6,500 and recorded it as an ASSET. Debited on "Supplies" Account

Then on June 30, only $1,000 is on hand. That means that $5,500 worth of supplies must have been used (Solved as 6,500 less 1,000)

Now, the entry should reduce the "Supplies" Account since there were only $1,000 left. So it's correct to credit Supplies for $5,500 to reduce $6,500 into $1,000 worth.

The corresponding debit would consequently be "Supplies Expense" since $5,500 worth of supplies was used for the month.

3 0

3 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