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
AlekseyPX
3 years ago
5

Honest Abe’s is a chain of furniture retail stores. Integral Designs is a furniture maker and a supplier to Honest Abe’s. Honest

Abe’s has a beta of 1.38 as compared to Integral Designs' beta of 1.12. Both firms carry no debt, i.e., are 100% equity-financed. The risk-free rate of return is 3.5 percent and the market risk premium is 8 percent. What discount rate should Honest Abe's use if it considers a project that involves the manufacturing of furniture?
Business
1 answer:
guapka [62]3 years ago
8 0

Answer:

The  discount rate should Honest Abe's use if it considers a project that involves the manufacturing of furniture is 12.46%

Explanation:

In this question, w e use the Capital Asset Pricing model method, which is shown below:

Expected return = Risk-free rate of return + Beta × market risk premium

                           = 3.5% + 1.12 × 8%

                            = 3.5% + 8.96%

                            = 12.46%

In this we use the Integral design beta not the Honest Abe beta

You might be interested in
Kaiser Industries has bonds on the market making annual payments, with 14 years to maturity, a par value of $1,000, and selling
9966 [12]

Answer:

The Coupon rate is 11.66%

Explanation:

Yield to maturity is the annual rate of return that an investor receives if a bond bond is held until the maturity.

Face value = F = $1,000

Selling price = P = $1,382.01

Number of payment = n = 14 years

Bond Yield = 7.5%

The coupon rate can be calculated using following formula

Yield to maturity = [ C + ( F - P ) / n ] / [ (F + P ) / 2 ]

7.5% = [ C + ( $1,000 - 1,382.01 ) / 14 ] / [ ( $1,000 + $1,382.01 ) / 2 ]

7.5% = [ C - $27.29 ] / $1,191

7.5% x $1,191 = C - $27.29

$89.33 = C - $27.29

C = $89.33 + $27.29 = $116.62

Coupon rate = $116.62 / $1,000 = 0.11662 = 11.66%

4 0
3 years ago
A customer sells your company a defective part. The part is put into your product, rendering it defective. What will most likely
Lostsunrise [7]

Answer: Your customer will likely blame you for the defect, not the supplier.

Explanation:

The customer would certainly blame me the seller for the defect, because I was the one that sold the goods to the customer, also the customer is not aware of what transpired between the seller and the supplier. Therefore the seller would have to on his part, lay some complaint to the supplier.

7 0
3 years ago
If a limited partner actively participates in day-to-day management of the business, he or she may forfeit limited partner statu
Tom [10]

Answer:

If a limited partner actively participates in day-to-day management of the business, he or she may forfeit limited partner status and lose limited liability for debts and liabilities: Given statement is a. True

Explanation:

A limited partner are also known as silent partners. They are part owners whose liability of the debts of the firm cannot exceed the amount that he invested in the company.

A limited partnership would have one general partner and at least one limited partner. The general partner is the one who manages the business from day-to-day.

Limited partners do not manage the day-to-day affairs of the business. In case they do, they are then treated as general partners. And would lose the limited liability for debts as stated in the statement. This, it is true.

7 0
3 years ago
Why does a business need to be concerned about social responsibility issues
mash [69]

Answer:

Being a socially responsible company can bolster a company's image and build its brand. Social responsibility empowers employees to leverage the corporate resources at their disposal to do good. Formal corporate social responsibility programs can boost employee morale and lead to greater productivity in the workforce.

3 0
3 years ago
Read 2 more answers
A group of related fields such as all the demographic information for one customer is called
gavmur [86]
A group of related fields such as all the demographic information for one customer is called record. <span> The customer record contains private</span><span> data about a customer: the standard data, (name, </span>order<span> data,billing information)  but also </span>interaction<span> information, and credit information.</span>
3 0
3 years ago
Other questions:
  • A fábrica Pettinati Brinquedos e Lazer Associados foi obrigada a reduzir seu pessoal em função da perda de um importante cliente
    11·2 answers
  • Steven is moving into his first apartment in a few weeks and has been busy packing. In addition to the things he has purchased w
    10·1 answer
  • Of the last 100 customers entering a computer shop, 25 have purchased a computer. If the classical method for computing probabil
    5·1 answer
  • Scott says, Weve gotten better because weve brought in more brain power, more creativity, and weve allowed people to use it, ind
    6·1 answer
  • German automakers Audi, Mercedes-Benz, and BMW all share the same goal of leading the international luxury vehicle market. Audi
    12·1 answer
  • Diehl Cleaners has the following balance sheet items. Classify each item as an asset, liability, or owner’s equity. Accounts pay
    12·1 answer
  • From a(n) _____ standpoint, the effect on performance motivation may be limited in ownership program because of the less obvious
    7·1 answer
  • K. Decker, S. Rosen, and E. Toso are forming a partnership. Decker is transferring $45,000 of personal cash to the partnership.
    5·1 answer
  • Bonds are basically also known as what?
    11·1 answer
  • Use the graph to answer the question that follows.
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!