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velikii [3]
3 years ago
12

On-line Text Co. has four new text publishing products that it must decide on publishing to expand its services. The firm's WACC

has been 17%. The projects are of equal risk, Beta of 1.6. The risk-free rate is 7% and the market rate is expected to be 12%. The projects expected returns are as follows:
Project W= 14%
Project X= 18%
Project Y= 17%
Project Z= 15%

What project(s) should be clearly rejected?

D. Reject Z
B. Reject Y and Z
A. Reject X and Y
C. Reject W
Business
1 answer:
dem82 [27]3 years ago
3 0

Answer:

C. Reject W

Explanation:

In this question, we apply the Capital Asset Pricing Model (CAPM) which is shown below:

Expected return = Risk-free rate of return + Beta × (Market rate -  Risk-free rate of return)

= 7% + 1.6 × (12%-7%)

= 7% + 1.6 × 5%

= 7% + 8%

= 15%

The Project W should be rejected as it gives only 14% expected return which is less than the derived expected return.

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yuradex [85]

The option that falls outside of the classification of business expenditures that fall into the category of variable costs is option C. costs of research and development. Read below about costs of research and development.

<h3>What is a costs of research and development?</h3>

These are costs taken to develop new products or processes that may or may not result in commercially viable items. The general rule is that research and development costs are to be expensed immediately when the costs are incurred.

Therefore, the correct answer is as given above.

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4 0
1 year ago
Assume that a speculator purchases a put option on British pounds (with a strike price of $1.50) for $.05 per unit. A pound opti
scoray [572]

Answer:

The highest net loss of $1,562.50 (i.e. – $1,562.50)

Explanation:

This can be calculated using the following equation:

Highest net profit possible = British pounds put option price per unit × Units of the pound option

                                                = $0.05 x 31,250

Highest net profit possible = $1,562.50

However, based on the information provided in the question, the option will not be exercised and this will result into the highest net loss of $1,562.50 (i.e. – $1,562.50).

7 0
3 years ago
Suppose bundle A contains 5 CDs and 5 DVDs and bundle B contains 2 CDs and 6 DVDs. If a consumer is able to rank different combi
Liono4ka [1.6K]

Answer:

E) a, b, and c are possible.

Explanation:

Consumer has different interests, thus they may prefer either Bundle A  with same volume of CD or DVDs or bundle B with more DVDs or even neither of any.

8 0
2 years ago
Janice and Shane are both senior software analysts. They have worked together on projects for six years and get along very well.
dybincka [34]

Answer:option D

Explanation: job sharing

3 0
2 years ago
A purchaser paid $403.10 for a TV that cost the seller $290. If the seller's markup was 39% of the $290 cost, then what would be
CaHeK987 [17]

Percent markup based on the selling price: 28.1%

Explanation:

The cost of the TV for the seller was

c=\$290

Of this, the markup of this price was 39%. Therefore, the value of the markup (in dollars) with respect to the cost for the seller was

m=0.39\cdot 290 =\$113.1

So, this was the markup relative to the cost for the seller.

The price paid by the purchaser instead is

p=\$403.1

Therefore, the percent markup based on the selling price (paid by the purchaser) is:

\frac{m}{p}\cdot 100 = \frac{113.1}{403.1}\cdot 100 =0.281\cdot 100 = 28.1\%

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5 0
3 years ago
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