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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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svetlana [45]

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Explanation:

Contract manufacturing is the outsourcing of some production activities that were formerly done by the producer to a third party. An organization may outsource certain parts for a product.

Contract manufacturing is the practice of giving out part of a work to outside sources rather than completing all the work within the company. It results in lower expenses and costs.

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3 years ago
Are there any benefits for the law being "Vague and Variable"?
Alisiya [41]
Their benefit is to all of society rather than to an individual 
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Hakimo Corp., a manufacturer of audio equipment, has developed a unique wireless speaker system that runs on solar power. The sp
Pavel [41]

Answer:

<u>discontinuous innovation.</u>

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3 0
4 years ago
If you wanted to build a structure on a river bank, you should build the structure __________ to maximize its lifetime.
Marina CMI [18]

Answer:

Above the point bar

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channelization

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Hope it helps:)
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