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Mariulka [41]
3 years ago
14

Piedmont Hotels is an all-equity company. Its stock has a beta of .87. The market risk premium is 7.4 percent and the risk-free

rate is 4.0 percent. The company is considering a project that it considers riskier than its current operations so it wants to apply an adjustment of 2.2 percent to the project's discount rate. What should the firm set as the required rate of return for the project
Business
1 answer:
vovikov84 [41]3 years ago
7 0

Answer:

12.64%

Explanation:

In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below

Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)

= 4% + 0.87 × 7.4%

= 4% + 6.438%

= 10.438%

The Market rate of return - Risk-free rate of return)  is also known as the market risk premium and the same is applied.

Now the required rate of return would be

= 10.438% + 2.2%

= 12.64%

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Which of the following is the best example of causation​ (versus correlation)? A. ​Women's skirts get shorter and the stock mark
slavikrds [6]

Answer:

B.

Explanation:

We are analizing events that are dependant. Cause and effect.

So let's analize the statements.

A. Not related at all. No cause and effect. Can happen together, but not related.

B. Gasoline is a derivative of oil. If oil prices go up, gasoline prices go up.

C. Not related at all. No cause and effect. Can happen together, but not related.

D. Not related at all. No cause and effect. Can happen together, but not related.

3 0
3 years ago
All of the fixed manufacturing overhead costs would continue whether Part B89 is made internally or purchased from an outside su
abruzzese [7]

Answer:

The correct option is a. Make the new product and buy the part to earn an extra $1.00 per unit contribution to profit.

Explanation:

Note: This question is not complete. The complete question is therefore provided before answering the question as follows:

Moon Appliance manufactures a variety of appliances which all use Part B89. Currently, Moon Appliance manufactures Part B89 itself. It has been producing 9,000 units of Part B89 annually. The annual costs of producing Part B89 at the level of 9,000 units include:

Direct materials = $3.00

Direct labor = $8.00

Variable manufacturing overhead = $4.00

Fixed manufacturing overhead = $3.00

Total cost = $18.00

All of the fixed manufacturing overhead costs would continue whether Part B89 is made internally or purchased from an outside supplier. Assume Moon Appliance can purchase 9,000 units of the part from the Nadal Parts Company for $20.00 each, and the facilities currently used to make the part could be used to manufacture 7,000 units of another product that would have a $6 per unit contribution margin. If no additional fixed costs would be incurred, what should Moon Appliance do?

Select one:

a. Make the new product and buy the part to earn an extra $1.00 per unit contribution to profit.

b. Make the new product and buy the part to earn an extra $4.00 per unit contribution to profit.

c. Continue to make the part to earn an extra $3.00 per unit contribution to profit.

d. Continue to make the part to earn an extra $8.00 per unit contribution to profit.

The explanation of the answer is now given as follows:

Since all of the fixed manufacturing overhead costs would continue whether Part B89 is made internally or purchased from an outside supplier, it implies that the fixed manufacturing overhead costs will not be considered in taking the decision.

We therefore proceed as follows:

Amount saved and generated per unit by outsourcing = Direct materials cost per unit + Direct labor cost per unit + Variable manufacturing overhead per unit + Per unit contribution margin from another product = $3 + $8 + $4 + $6 = $21

Price to buy from Supplier = $20

Extra per unit contribution to profit = Amount saved and generated per unit by outsourcing – Price to buy from Supplier = $21 - $20 = $1

Therefore, the correct option is a. Make the new product and buy the part to earn an extra $1.00 per unit contribution to profit.

3 0
3 years ago
Maria lost her job because the economy is shrinking. This is an example of _____.
kakasveta [241]
It is an example of cyclical unemployment.

I hope this helps!
7 0
3 years ago
Read 2 more answers
A father wants to save for his eight?year?old son�s college expenses. The son will enter college 10 years from now. An annual am
Ganezh [65]

Answer:

Instructions are listed below

Explanation:

Giving the following information:

The son will enter college 10 years from now. An annual amount of $40,000 in constant dollars will be required to support the son's college expenses for four years.

The future general inflation rate is estimated to be 6% per year, and the market interest rate on the savings account will average 8% compounded annually

A) We need to find the present value for each 40,000-year expense.

Formula= FV/(1+i)^n

1: PV= 40,000/(1.06)^10= 22,335.80

2: PV= 40,000/(1.06)^11= 21,071.50

3: PV= 19,878.77

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B) Total final value= 160,000

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C) We need to use the following formula:

FV= {A*[(1+i)^n-1]}/i

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A= (FV*i)/{[(1+i)^n]-1}

A= (160,000*0.06)/[(1.06^10)-1]= $12,138

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I think it's "Adrienne did not enter her ATM withdrawal correctly". That's my best guess
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