1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
dalvyx [7]
3 years ago
14

Blue Angel, Inc., a private firm in the holiday gift industry, is considering a new project. The company currently has a target

debt-equity ratio of .30, but the industry target debt-equity ratio is .25. The industry average beta is 1.10. The market risk premium is 6.2 percent and the risk-free rate is 3.8 percent. Assume all companies in this industry can issue debt at the risk-free rate. The corporate tax rate is 21 percent. The project requires an initial outlay of $790,000 and is expected to result in a $94,000 cash inflow at the end of the first year. The project will be financed at the company’s target debt-equity ratio. Annual cash flows from the project will grow at a constant rate of 4 percent until the end of the fifth year and remain constant forever thereafter.
Business
1 answer:
Dominik [7]3 years ago
3 0

Answer:

The present value of the project is required.

The answer is attached

Explanation:

Download xlsx
You might be interested in
What education do you need for high school
LenaWriter [7]

Answer:

To teach High School, you need a Bachelors degree.

To graduate it, you have to pass English/Language Arts · Mathematics · Science · Social Studies/History · Foreign Languages · Physical Education

5 0
3 years ago
Read 2 more answers
AB Builders, Inc., has 16-year bonds outstanding with a par value of $2,000 and a quoted price of 99.727. The bonds pay interest
galben [10]

Answer:

6.54%

Explanation:

Face Value = $2,000

Current Price = 2000 x 99.727% =  1994.54

YTM = 6.56%

We can find the coupon rate by a simple formula

Coupon Rate = (Interest / Face value) x 100

We need to find interest first in order to find coupon rate

YTM = Interest / Current price

6.56% x 1994.54 = Interest

130.84 = Interest

Coupon Rate = (130.84 / 2000) x 100

Coupon Rate = 6.54%

6 0
3 years ago
Isabel invested in four-stock portfolio; she invested 20 percent of her money in Stock A, 30 percent of her money in Stock B, 25
expeople1 [14]

Answer: 1.50

Explanation:

Isabel's portfolio beta is a weighted average of the individual stock betas.

= Weight of stock A * Stock A beta +  Weight of stock B * Stock B beta +  Weight of stock n * Stock n beta

= (20% * 0.4) + (30% * 1.2) + ( 25% * 2.5) + (25% * 1.75)

= 0.08 + 0.36 + 0.625 + 0.4375

= 1.5025

= 1.50

5 0
2 years ago
Wildhorse, Inc., is expected to grow at a constant rate of 5.00 percent. If the company’s next dividend, which will be paid in a
MAVERICK [17]

Answer:

the required rate of return on the stock is 12.52%

Explanation:

The computation of the required rate of return on the stock is shown below:

= (Next year Dividend ÷  current stock price ) + growth rate

=  ($1.68 ÷ $ 22.35 ) + 0.05

= 0.075 + 0.05

= 12.52%

Hence, the required rate of return on the stock is 12.52%

We simply applied the above formula so that the correct value could come

And, the same is to be considered

3 0
3 years ago
Stock A has a beta of 0.8, stock B has a beta of 1.0 and stock C has a beta of 1.2. Portfolio P has 1/3 of it value invested in
Fittoniya [83]

Answer:

e. portfolios P's expected return is equal to the expected return on stock B

6 0
3 years ago
Other questions:
  • 5 employees with annual salaries of 50000 60000 50000 70000 90000 what is the annual mean
    11·1 answer
  • What is meant by centralised direction?
    7·1 answer
  • Marks Consulting purchased equipment costing $45,000 on January 1, Year 1. The equipment is estimated to have a salvage value of
    15·1 answer
  • Economists describe the group that includes: natural resources, capital, human resources, and entrepreneurship as _______.
    12·1 answer
  • Under which of the following conditions is job dissatisfaction not likely to translate into turnover?a. Employees have high educ
    13·1 answer
  • You are given the following information for Bowie Pizza Co.: Sales = $64,000; Costs = $30,700; Addition to retained earnings = $
    15·1 answer
  • How do short term goals differ from being long term goals
    8·1 answer
  • How does consumer response to advertising vary on different days of the week and at different times of the day
    12·1 answer
  • Stanford owns and operates two dry cleaning businesses. He travels to Boston to aquire a restaurant. Later in the month, he trav
    9·1 answer
  • Using money prices to compare relative values of goods and services represents money functioning as a?
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!