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docker41 [41]
3 years ago
9

The Anderson Company has equal amounts of low-risk, average-risk, and high-risk projects. The firm's overall WACC is 12%. The CF

O believes that this is the correct WACC for the company's average-risk projects, but that a lower rate should be used for lower-risk projects and a higher rate for higher-risk projects. The CEO disagrees, on the grounds that even though projects have different risks, the WACC used to evaluate each project should be the same because the company obtains capital for all projects from the same sources. If the CEO's position is accepted, what is likely to happen over time
Business
1 answer:
astra-53 [7]3 years ago
8 0

Answer:

e. The company will take on too many high-risk projects and reject too many low-risk projects.

Explanation:

By using the WACC for discounting purposes in case of the higher risk projects the net present value would be greater in such cases and also the high discount rate is applied. It is easily accepted but at the same time it also rise the organization risk

Therefore in the given case, the option e is correct and the same is to be considered

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Mudvayne, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 11 years to maturity that is
ale4655 [162]

Answer:

3.56%

Explanation:

In this question, we use the Rate formula which is shown in the spreadsheet.  

The NPER represents the time period.

Given that,  

NPER = 11 × 2 = 22 years

Present value = $1,000 × 104% = $1,040

Future value = $1,000

PMT = 1,000 × 4% × (6 months ÷ 12 months)  = $20

The formula is shown below:

= Rate(NPER;PMT;-PV;FV;type)

The present value come in negative

So, after solving this, the answer would be 3.56% ( 1.78 × 2)

7 0
3 years ago
According to the text, there are four different aspects of a decision that a business should evaluate in order to___ maximize pr
inna [77]

Answer: Legal, public relation, safety risk, financial.

Explanation:

The above are different aspects of a decision in order to maximize profit and be a good corporate citizen.

Financial decision taking with respect to capital structure.

Legal- legal rights and responsibilities.

Safety risk assessment and mitigation of safety risk.

Public relation communication that are strategic that builds mutually beneficial relationships.

3 0
3 years ago
When reviewing your client's search network campaign, you notice that an ad in one of the ad groups has a lower average position
svlad2 [7]
The automated bid strategy that the person should use is the target search page location. This will allow the ads that are being displayed to find a better location or where it could be seen by the internet users. It will be most likely be placed on the top pages or the most used sites in the internet, in which it will produce the ad to be found in the most researched pages.
8 0
2 years ago
Merchant Company had the following foreign currency transactions: On November 1, 20X6, Merchant sold goods to a company located
vazorg [7]

Answer

The answer and procedures of the exercise are attached in the images below.

Explanation  

Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in a 2 sheets with the formulas indications.  

6 0
3 years ago
Ray's Satellite Emporium wishes to determine the best order size for its best-selling satellite dish (model TS111). Ray has esti
xeze [42]

Answer:

By using the EOQ model, ray should order 22.8 units or 23 units each time

Explanation:

Solution

Recall that:

Ray annual estimated demand for this model is = 1,050 units

The cost of one unit carry is =$105

He estimated each order costs  to place = $26

Now,

The EOQ  model= (2*annual demand*ordering cost/holding cost per unit per year)^.5

Thus,

EOQ = (2*1050*26/105)^.5

EOQ = 22.8 units or 23 units

6 0
3 years ago
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