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Helga [31]
3 years ago
8

As a financial analyst, you are tasked with evaluating a capital-budgeting project. You were instructed to use the IRR method, a

nd you need to determine an appropriate hurdle rate. The risk-free rate is 4%, and the expected market rate of return is 11%. Your company has a beta of 1.0, and the project that you are evaluating is considered to have risk equal to the average project that the company has accepted in the past.
Required:
1. According to CAPM, the appropriate hurdle rate would be ___________.
Business
1 answer:
Svetllana [295]3 years ago
7 0

Answer:

11%

Explanation:

The capital asset pricing model is used to calculate required rate of return for a certain project. The rate of return is calculated based on risk free rate and rate of return with the volatility. Hurdle rate is the minimum rate return required for a project. The CAPM, is used to calculate the appropriate hurdle rate for the project.

Hurdle rate = Rf + (Rm - Rf) * beta

Hurdle rate = 4% + (11% - 4%) * 1.0

Hurdle rate = 11%

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2 years ago
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3 years ago
A company has got $500 in cash and cash equivalents, $300 in inventory and $200 in account receivables. The firm has long term a
ElenaW [278]

Answer:

The computation is shown below:

Explanation:

The computation is shown below:

Current ratio = current assets ÷ current liabilities

where,

Current assets = cash + inventory + account receivables

= $500 + $300 + $200

= $1000

Current liabilities is

= $200 + $400

= $600

So, the current ratio is

= $1,000 ÷ 600

= 1.67 times

Debt Ratio is

= Total Liabilities ÷ Total Assets

= $600 ÷ $1,500

= 40%  

TIE is Time Interest Earned ratio

= EBIT ÷  Interest Expense

= $5,000 ÷ $2,000

= 2.5

Profit margin is

= Net Income ÷ Total Sales

= $800 ÷$10,000

= 8%

And,

Total asset turnover  is

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3 years ago
What is the most important thing about meeting new contacts
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8 0
3 years ago
Read 2 more answers
Faiz would like to illustrate the commission savings delivered by a payment app compared with a credit card. He decides to use a
yulyashka [42]

Full question(find attached) :

Faiz would like to illustrate the commission savings delivered by a payment app compared with a credit card. He decides to use a company that has a monthly sales volume of $50,000 delivered over 100 equal transactions.

From the information available, what is the difference between the payment app with the lowest charge, compared with a credit card charge?

A) $575

B) $1200

C) $1050

D) $480

E) $1237

Answer and Explanation:

Credit card processing firms charge an average of 3.5% and a flat fee of about 20 cents so we would make our comparison on this basis:

Since Faiz decides to use a company that has a monthly sales volume of $50,000 delivered over 100 equal transactions

The customer would pay $50000/100= $500 per instalment

Given the information I'm the table from question Instant wallet charges 3.5% +$0.20 for transactions lower than $1500

= 0.035*$500+$0.20=17.5+0.20=$17.7

An average credit card processing firms would charge :

0.035*500+$0.35=17.5+0.35= $17.85

Therefore instant wallet is cheaper and would save a customer =$17.85-17.7= $0.15

8 0
3 years ago
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