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
Likurg_2 [28]
3 years ago
5

The required return on the stock of Moe's Pizza is 10.8 percent and aftertax required return on the company's debt is 3.40 perce

nt. The company's market value capital structure consists of 69 percent equity. The company is considering a new project that is less risky than current operations and it feels the risk adjustment factor is minus 1.9 percent. The tax rate is 39 percent. What is the required return for the new project? rev: 12_20_2018_QC_CS-152115 Multiple Choice 10.41% 6.19% 8.51% 9.99% 6.61%
Business
1 answer:
garik1379 [7]3 years ago
8 0

Answer:

The required return for the new project is 6.87%

Explanation:

In order to calculate the required return for the new project we would have to calculate the Weighted Average Cost of Capital (WACC) adjusted by risk adjustment factor .

The Weighted Average Cost of Capital (WACC) = [After Tax Cost of Debt x Weight of Debt] + [Cost of equity x Weight of Equity]

After -tax Cost of Debt = 3.40%

Cost of Equity = 10.80%

Weight of Debt = 0.39

Weight of Equity = 0.69

Therefore, the Weighted Average Cost of Capital (WACC) = [After Tax Cost of Debt x Weight of Debt] + [Cost of equity x Weight of Equity]

= [3.40% x 0.39] + [10.80% x 0.69]

= 1.32% + 7.45%

= 8.77%

The required return for the new project = Weighted Average Cost of Capital – Risk Adjustment Factor

= 8.77% - 1.90%

= 6.87%

The required return for the new project is 6.87%

You might be interested in
At the beginning of her current tax year, Angela purchased a zero-coupon corporate bond at original issue for $30,000 with a yie
lisabon 2012 [21]

Answer:

She will report an interest income of $1,827 for this year.

Explanation:

The yield to maturity is 6%. However, the interest on the bond is compounded semi-annually. Therefore, we need to calculate the interest income for either semi-annual period and then sum the two incomes.  

Interest income for first semi-annual period

= $30,000 x 0.06 x 6/12

= $900

Interest income for second semi-annual period

= ($30,000 + $900) x 0.06 x 6/12

= $30,900 x 0.06 x 6/12

= $927

Interest income for the year

= $900 + $927

= $ 1,827

4 0
3 years ago
Read 2 more answers
Stan, an air-conditioning and heating technician, files a suit against Temp-Set Corporation, alleging that its thermostats are u
Mashcka [7]

Answer: option (B). knowledgeable user.

Explanation: knowledgeable user simply means If a particular danger is or should be commonly known by particular users of the product, the manufacturer need not warn those particular users. An example is a case of Stan, an air-conditioning and heating technician, files a suit against Temp-Set Corporation, alleging that its thermostats are unreasonably dangerous due to the possibility of electrical shock, Temp-Sets defense is knowledgeable user.

5 0
3 years ago
The ___________ is a statement for the daily business transactions. it includes the list of checks and balances for the office f
Leto [7]

The Date sheet is a statement for daily business transactions. it includes the list of checks and balances for the office for a specific date of service.

A business transaction is an economic event involving a third party that is documented in the accounting system of a company.

Such a transaction needs to have a monetary value. Business transactions include, for example:

In a specific diary, such as a purchasing journal or sales journal, high-volume commercial transactions may be documented.

These journals are used to record business transactions, which are then regularly compiled and submitted to the general ledger.

Transactions with a lower volume are submitted straight to the general ledger. The financial accounts of the company eventually include a summary of these transactions.

A source document must always be used to back up a business transaction. A purchase order, for instance, might be used to facilitate the purchase of items from a supplier and the payment of wages to an employee.

Learn more about business transactions here

brainly.com/question/19959208

#SPJ4

8 0
1 year ago
Stan, an air conditioning and heating technician, files a suit against Temp-Set Corporation, alleging that its thermostats are u
vova2212 [387]

Answer:

knowledgeable user

Explanation:

Knowledgeable user is a term that refers to particular users of a specific product, that must possess certain qualifications to use that specific product. In the case of knowledgeable users, the manufacturer of the product is not require to warn these users about the dangers of using their product.

In this case, Stan as an air conditioning and heating technician should know about the dangers of using electrical thermostats because of his profession.

5 0
3 years ago
Which type of savings institution is owned and operated by the same people who have accounts in it
inn [45]

A credit union is owned and operated by the people who have accounts in it. In a traditional bank, the bank is run by a president and a board of higher people. In a credit union, all members of the union own a stake of the company and the board is made up of members of the credit union.

7 0
2 years ago
Read 2 more answers
Other questions:
  • Leon is catering a luncheon. He is only supplying the food. What kind of catering service is he providing?
    7·1 answer
  • Each time a politician or celebrity writes a book, bookstores can expect at least some customers to want the book, but whether o
    8·1 answer
  • Liquidity ratios are used to measure a firm's ability to meet its obligations as they come due. Two of the most commonly used li
    12·1 answer
  • In both Gamma and Delta average labor productivity is $20,000 per worker per year. The population of Gamma is 200,000 and the po
    6·1 answer
  • Shawna would like to explore a career that would allow her to work outdoors with natural resources. Which two careers would be t
    9·1 answer
  • During last year the price of regular unleaded gasoline in Oakland, California increased 10 percent. If the price elasticity of
    6·1 answer
  • BoundStar and ClipKlik are two of the biggest companies in the smartphone industry. When BoundStar launched a new ultra-slim sma
    14·2 answers
  • On January 1, 2020, HD Corp. paid $60,000 and issued a 5-year noninterest bearing note payable with a face value of $120,000 in
    8·1 answer
  • Money serves three functions in the economy: medium of exchange, unit of account, and store of value.
    9·1 answer
  • What does it mean when earned value is above planned value?
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!