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kirza4 [7]
2 years ago
8

Duval Inc. uses only equity capital, and it has two equally-sized divisions. Division A's cost of capital is 10.0%, Division B's

cost is 14.0%, and the corporate (composite) WACC is 12.0%. All of Division A's projects are equally risky, as are all of Division B's projects. However, the projects of Division A are less risky than those of Division B. Which of the following projects should the firm accept? A Division B project with a 13% return. A Division B project with a 12% return. A Division A project with an 11% return. A Division A project with a 9% return. A Division B project with an 11% return.
Business
1 answer:
saveliy_v [14]2 years ago
4 0

Answer:

A Division A project with an 11%

Explanation:

The project should be analize with the cost of capital for each division, as it is a know values it is a better choise than WACC.

For that reason, going for project of less than 14% (13% or 11%) in division b will be destroying capital

While the project in Division A for 11% means it will generate economic value to the firm as the cost is 10% and return 11%

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Suppose a​ 40-year-old person deposits ​$12 comma 00012,000 per year in an Individual Retirement Account until age 65. Find the
tatiyna

Answer:  interest earned = $8942372340

$8942672340 this is amount after 25 years.

Explanation:

formula used:    S= R*[ (1+<em>i </em>)ⁿ-1 / <em>i </em>]

where:

S is future value

R is periodic payment

<em>i </em> is interest rate period

n is number of periods

R= $3000

n= 65-40=25   now 25*4=100   QUARTERLY that is why we used 4

<em>i </em>= 55% which is equal to 0.55

so, for quarterly <em>i= </em>0.55/4= 0.138

now putting them in formula given above

S= 3000*[ (1+0.138)¹⁰⁰-1] / 0.138

S= $8942672340 (future value )

total money deposited = number of period * periodic amount

                                        = $3000*100 = $300,000

interest earned = future value - total money deposited

                           = 8942672340 - 300,000

 interest earned = $8942372340

8 0
3 years ago
Stocks A and B have the following data. Assuming the stock market is efficient and the stocks are in equilibrium, which of the f
IrinaK [193]

Answer: E) A's expected dividend is $0.75 and B's expected dividend is $1.20

Explanation:

Using the Gordon growth model, you can calculate the expected dividend. The formula is:

Price = Expected dividend/ (expected return - expected growth)

Stock A expected dividend

25 = D/ (10% - 7%)

D = 25 * 3%

= $0.75

Stock B expected divided

40 = D / (12% - 9%)

D = 40 * 3%

= $1.20

Option A, C and B are therefore wrong.

Option E is correct.

5 0
3 years ago
A cement manufacturer has supplied the following data:
Vesnalui [34]

Answer:

d. $2.10 per unit

Explanation:

Calculation for What is the company's unit contribution margin

First step is to calculate the Variable cost using this formula

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Let plug in the formula

Variable cost = $297,000 + $165,000

Variable cost = $462,000

Second step is to calculate Total Contributiom Margin using this formula

Total Contributiom Margin=Sales – Variable Cost

Let plug in the formula

Total Contributiom Margin= $924,000 - $462,000

Total Contributiom Margin= $462,000

Now let calculate Unit Contribution Margin using this formula

Unit Contribution Margin= Total Contribution Margin/Total number produced and sold cement

Let plug in the formula

Unit Contribution Margin = $462,000 / 220,000 Unit Contribution Margin= $2.10 per unit

Therefore the Unit Contribution Margin will be $2.10 per unit

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