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Lana71 [14]
3 years ago
11

A company estimates that an average-risk project has a WACC of 10 percent, a below-average-risk project has a WACC of 8 percent,

and an above-average-risk project has a WACC of 12 percent. Which of the following independent projects should the company accept?
A) Project A has average risk and an IRR = 9 percent.
B) Project B has below-average risk and an IRR = 8.5 percent.
C) Project C has above-average risk and an IRR = 11 percent.
D) All of the projects above should be accepted.
E) None of the projects above should be accepted.
Business
1 answer:
prisoha [69]3 years ago
8 0

Answer:

B) Project B has below-average risk and an IRR = 8.5 percent.

Explanation:

Since the evaluation is based on IRR, use IRR rule that says you accept a project if its IRR > Cost of capital(WACC in this case)

Project A's IRR of 9% is < 10% WACC for average risk projects hence reject it.

Project B's IRR of 8.5% is > 8% WACC for below- average risk projects hence accept it.

Project C's IRR of 11% is < 12% WACC for above- average risk projects hence reject it.

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A manager hires labor and rents capital equipment in a very competitive market. Currently the wage rate is $12 per hour and capi
Alex777 [14]

The firm should decrease the amount of capital used.

Solution:

The wage rate is $12 per hour and capital is rented at $8 per hour.

The marginal product of labour is 45 units of output per hour and the marginal product of capital is 65 units of output per hour.

A manager hires labour and rents capital equipment in a very competitive

market.

The ratio of marginal product of labour and wage rate

= \frac{45}{12}

= 3.75

The ratio of marginal product of capital and rent

= \frac{65}{8}

= 8.125

If the cost ratio is higher, it means that the boss must minimize the volume of money involved in the manufacturing process.

5 0
3 years ago
Sleep master, inc. manufactures bedding sets. the budgeted production is for 57,000 comforters in 2013. each comforter requires
pentagon [3]

Answer:

Total Material cost = $507,000

Explanation:

Material budget shows the total budgeted material cost for a specific period.

               Sleep master, inc.

          Direct Material Budget

            December 31, 2013

Budgeted production units                57,000

<u>yards required per comforter                   × 6</u>

Materials needed for production = 342,000 yards

<u>Add: Ending Material Inventory   =  27,000   yards</u>

Total Material units required       = 369,000 yards

<u>Less: Beginning Materials            = (31,000)  yards</u>

Material used                                = 338,000 yards

<u>Cost per yard                                         × $1.50</u>

Total Material cost                       = $507,000

5 0
3 years ago
Write a short memo to Ms Loki explaining the business performance findings of your statement of cash flow.
UkoKoshka [18]

The memo explaining the business performance findings from the statement of cash flow will entails:

  • address of the receiver
  • subject of the memo
  • body of the memo.

<h3>What is a statement of cash flow?</h3>

This refers to the financial statement that shows how changes in balance sheet accounts and breaks the analysis down to operating, investing and financing activities.

Hence, the memo will inform Ms Loki about  business performance findings especially on the cash position of the business such as the inflow and outflow of cash from the firm.

Read more about statement of cash flow

brainly.com/question/24179665

#SPJ1

8 0
2 years ago
Who knows bts? just wondering
Likurg_2 [28]

Not the place to be asking but at this point they are pretty well known.

6 0
3 years ago
Read 2 more answers
Mikalya put 500$ in the bank. The annual interest rate is 2 percent. How much money will mikalya earn in one year?
Tema [17]

Answer:

&10

Explanation:

This is a case of simple interest.

It gotten as Interest= Prt

Where:

P=principal

r=rate

t=time

Therefore

$500×2%×1= 10

5 0
3 years ago
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