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Colt1911 [192]
3 years ago
7

Weatherall Enterprises has no debt or preferred stock¾it is an all-equity firm¾and has a beta of 2.0. The chief financial office

r is evaluating a project with an expected return of 14%, before any risk adjustment. The risk-free rate is 5%, and the market risk premium is 4%. The project being evaluated is riskier than an average project, in terms of both its beta risk and its total risk. Which of the following statements is CORRECT?
A.Riskier-than-average projects should have their expected returns increased to reflect their higher risk. Clearly, this would make the project acceptable regardless of the amount of the adjustment.
B.Capital budgeting projects should be evaluated solely on the basis of their total risk. Thus, insufficient information has been provided to make the accept/reject decision.
C.The accept/reject decision depends on the firm's risk-adjustment policy. If Weatherall's policy is to increase the required return on a riskier-than-average project to 3% over rS, then it should reject the project.
D.The project should definitely be accepted because its expected return (before any risk adjustments) is greater than its required return.
E.The project should definitely be rejected because its expected return (before risk adjustment) is less than its required retu
Business
1 answer:
Helen [10]3 years ago
3 0

Answer:

The accept/reject decision depends on the firm's risk-adjustment policy. If Weatherall's policy is to increase the required return on a riskier-than-average project to 3% over rS, then it should reject the project - option C

Explanation:

Once the said project is riskier, the accept/ reject criterion will be considered based on risk adjusted discount rate which would be higher than company’s cost of capital by the amount of risk premium. Here the risk premium is 3%.

Thus, the decision to accept/reject depends on the risk-adjustment policy of the firm. If Weatherall's policy is to increase the required return on a riskier-than-average project to 3% over rS, then it should reject the project - option C is the best answer.

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The following questions will test you on what you have just learned about sentence-level writing including dangling modifiers, i
evablogger [386]

Answer:

<h2>Sentence-level Writing</h2>

a. Dangling Modifier:

 

1.

Dangling Modifier:  When beginning the meeting

Best Revision:  2. When we were beginning the meeting, the fire alarm went off

2.

Dangling Modifier :  taking the train into Boston

Best Revision: Taking the train into Boston, Katie reviewed the meeting minutes.

b. Identifying the dependent clauses:

1. Unless he responds to my request in the next 24 hours

3. When he opened the e-mail message

c. Identifying the independent clauses:

2. Meanwhile, the executive assistant printed the agenda.

d. Identifying the sentence with the correct parallel structure:

1. The systems analyst found that we needed to upgrade our equipment, revise our backup process, and implement better security measures.

e. Best option to complete the sentence:

If you _________, you will do well in this corporation.

1. write well, speak well, and use good interpersonal skills

Explanation:

a. A phrase or clause that is not directly related to the word or words it modifies is called a dangling modifier.  Usually, the word a dangling modifier modifies may be absent from the sentence.  An example is "when beginning the meeting."  The word it modifies may be "we" as in "When we were beginning the meeting, the fire alarm went off."

b. A clause which cannot make a complete sense or sentence is called a dependent clause.  It requires another clause to make a complete sense.  The clause that makes a complete a complete sentence and can stand alone without another clause is an independent clause.

c. A sentence that has grammatical structure which is balanced is said to have parallelism.  This can also be called parallel structure or construction.  This means that the items listed follow similar pattern that rhyme with one another.  Let us revise the sentence with the wrong parallel structure in this case so as to make it become a parallelism:  "The systems analyst found that we needed upgraded equipment, revised backup processes, and better implemented security measures."  By this revision, the wrong parallel sentence now has a well-structured parallelism.

5 0
3 years ago
Which one of the following ratios is a measure of a firm's liquidity?
Hunter-Best [27]

Answer:

1. quick ratio

Explanation:

Common liquidity ratios include the quick ratio, current ratio, and days sales outstanding. Liquidity ratios determine a company's ability to cover short-term obligations and cash flows, while solvency ratios are concerned with a longer-term ability to pay ongoing debts.

Pls mark brainliest

Thank you

6 0
1 year ago
On January 1, 2016, Hackman Corporation issued $1,400,000 face value 12% bonds dated January 1, 2016, for $1,423,060. The bonds
krok68 [10]

Answer:

(a) Bond issuance:

Debit Cash                                                           $1,423,060

Credit Bonds payable                                         $1,400,000

Credit Premium on bond payable                          $23,060

<em>(To record bond issuance)</em>

(b) June 20 interest payment

Debit Interest expense (balancing figure)              $81,694

Debit Premium on bond payable                             $2,306

Credit Cash                                                             $84,000

<em>(To record first interest payment - June 30)</em>

(c) December 31  interest payment

Debit Interest expense (balancing figure)             $81,694

Debit Premium on bond payable                           $2,306

Credit Cash                                                            $84,000

<em>(To record first interest payment - December 31 )</em>

Explanation:

A bond is a long-term promissory note issued by a company in order to borrow from investors to fund its business operations.

Calculation of the interest expense:

Premium on bonds payable (balancing figure) = $23,060

Number of periods = 5 years x 2 = 10 periods

Amortization of premium on bond payable = $23,060 / 10 periods = $2,306

Calculation of the cash proceed:

Cash = Face value of bond x contractual interest x Time period

Cash = $1,400,000 x 12% x 6 / 12 = $84,000 (see the journals above)

4 0
4 years ago
(04.03 LC)
klemol [59]

Answer:

C. Safe driving

Explanation:

Behavioral factors refer to the lifestyle habits of an individual.  Auto insurance premiums are largely determined by the risk involved, as assessed by the insurance company.  Insurance companies consider

  • the car and its safety features,
  • the driver's history and habits,
  • insured credit history, among other factors, when determining auto premiums.

Safe driving is a habit that develops in a driver over time. It is captured in the driver's driving history.  A driver with few incidents and accidents than other pay lower insurance premiums. However, accident-prone drivers, those who drive many hours per day, and night drivers will always pay high insurance premiums.

5 0
3 years ago
The continual process by which managers actively encourage, stimulate, and support employee commitment to the company, the compa
vekshin1

Answer:

Internet marketing

Explanation:

The internet marketing is the marketing technique where the company promotes its goods and services over the internet so that it become for consumers to check out the company products at their convenient time. Also it could be accessed via mobile phones, laptops and etc.

Here in the given situation, the continuous through which managers actively motivates and support the employees so this situation represent the internet marketing

5 0
3 years ago
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