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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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Answer:

$2.38

Explanation:

Number of shares purchased

= $40,000 / $34

= $1,176

EBIT / 6,000 = [EBIT - ($40,000 * 0.07)] / (6,000 - 1176)

EBIT / 6,000 = (EBIT - $2,800) / 4,824

4,824 EBIT = 6000 EBIT - $16,800,000

1,176 EBIT = $16,800,000

EBIT = $14,285.71

Earning per Shares at Break-even level of earning

= [EBIT - ($40,000 * 0.07)] / (6,000 - 1,176)

= ($14,285.71 - $2,800) / 4,824

= $11,485.71 / 4,824

= $2.38

3 0
2 years ago
When a nation's currency suddenly loses value, the ________ may step in to buy the afflicted currency?
cricket20 [7]
If a nation's currency drops in value significantly, the International Monetary Fund could step in and buy the currency so that some stability could occur economically
3 0
3 years ago
Luis regularly reminds his team members of the purpose of their work and why they are important to the organization. he also reg
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Answer:

Transformational leadership style.

Explanation:

Transformational leadership creates positive change in the people and environment being led, and seeks to empower followers to better themselves and ultimately become leaders too.

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Answer:

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Explanation:

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Most other data in the question seems irrelevant.

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Rzqust [24]

The correct option is task; relationship. The first part of this meeting illustrates the task conflict that later turned into relationship conflict.

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Therefore, in the organizational environment there are several types of conflicts with different scopes, which can be reduced through the creation of strong personal relationships and clear and objective communication.

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