Answer:
The firm's cost of equity is C. 14.05 percent
Explanation:
Hi, we need to use the following formula in order to find the cost of equity of this firm.
Where:
r(e) = Cost of equity
rf = risk free rate
rm = Market rate of return
Everything should look like this.
So, this firm´s cost of equity is 14.05%
Best of luck
<span>It is the value of the gold that backs the value of representative money.</span>
Answer:
a. $316,920
Explanation:
The computation of the net present value for Project A is shown below:
The net present value = Cash inflow after considering the discount factor - initial cost or initial investment
Cash inflow after considering the discount factor = $7,400,000
The discount factor for 4 years at 18% = 0.5158
So, the cash inflow is
= $7,400,000 × 0.5158
= $3,816,920
And, the initial investment is $3,500,000
So, the net present value is
= $3,816,920 - $3,500,000
= $316,920
Answer:
The correct answer is letter "D": the costs of inspection; the costs of passing on defective items.
Explanation:
It is said that as long as a business target to develop its <em>quality control</em> frequently, the lesser that company will depend on <em>inspection</em>. Inspection is a critical assessment of materials, products or structures that require evaluating, testing and measuring. Inspectors take measurements and make comparisons. The amount of inspection needed directly relies on <em>the cost of the inspection</em> and the <em>costs of passing on defective items</em>.
Answer:
Risk-free rate = 3.5%
Market risk-premium = 6.9%
Cost of equity (Ke) = ?
Ke = Rf +β(Rm - Rf)
Ke = Rf + Market risk premium
Ke = 3.5 + 6.9
Ke = 10.4%
Cost of debt (Kd) = 5.4%
Market value of debt (D) = 12
Market value of equity (E) = 88
Market value of the company (V) = 100
WACC = Ke(E/) + Kd(D/V)(1-T)
WACC = 10.4(88/100) + 5.4(12/100)(1-0.40)
WACC = 9.152 + 0.3888
WACC = 9.54%
Explanation:
In this case, there is need to calculate cost of equity according to capital asset pricing model, which is risk-free rate plus market risk-premium.
Then, we will calculate the weighted average cost of capital, which equals cost of equity multiplied by the proportion of equity in the capital structure plus after-tax cost of debt multiplied by the proportion of debt in the capital structure. Since the proportion of debt in the capital structure is 12%(12/100), the proportion of equity will be 88%(88/100).
