Ask question

Ask question

All categories

3 years ago

11

A medical group practice is considering offering a new service with risk that is greater than the current risk of the business.

in evaluating this investment, the decision maker should:

1 answer:

zlopas [31]3 years ago

4 0

Stick to the regular risk and not the new one

You might be interested in

Select three aspects that must be considered when analyzing assets.

serious [3.7K]

Answer:

Explanation:

Living expenses

Income

Financial plan

3 0

3 years ago

Bond A pays $4,000 in 14 years. Bond B pays $4,000 in 28 years. (To keep things simple, assume these are zero-coupon bonds, whic

Arlecino [84]

Answer and Explanation:

Given that Bond A pays $4,000 in 14 years and Bond B pays $4,000 in 28 years, and that the interest rate is 5 percent, we see that Using the rule of 70, the value of Bond A is 70/5 = doubled after 14 years. Now if its value is 4000 in 14 years, its current value must be halved. Hence the value is 2000.

Sinilarly the value of Bond B is approximately one fourth now because it pays 4000 in 28 years. Hence its value is 4000/4 = 1000.

Now suppose the interest rate increases to 10 percent. Hence the doubling time is 70/10 = 7 years

Using the rule of 70, the value of Bond A is now approximately 1,000 and the value of Bond B is 250

Comparing each bond’s value at 5 percent versus 10 percent, Bond A’s value decreases by a smaller percentage than Bond B’s value.

The value of a bond falls when the interest rate increases, and bonds with a longer time to maturity are more sensitive to changes in the interest rate.

8 0

3 years ago

Accounts Amounts Cash received from sale of products to customers $ 31,000 Cash received from the bank for long-term loan 36,000

elixir [45]

Answer:

Ending cash balance : 22,600

Explanation:

<u>operating activities:</u>

collection from products 31,000

collection from services 21,000

merchandise suppliers (10,200)

wages paid (22,200)

advertisement paid (2,200)

generated from operating activities 17,400

<u>financing activities:</u>

loan from the bank 36,000

dividends paid (4,200)

cash generated from financing activities 31,800

<u />

<u>investing activities:</u>

sale of warehouse 11,200

purchase of equipment (41,000)

cash used in investing activities (29,800)

cash generated for the period 19,400

beginning cash balance 3,200

Ending cash balance 22,600

6 0

3 years ago

Turnbull Co. has a target capital structure of 58% debt, 6% preferred stock, and 36% common equality. It has a before-tax cost o

ioda

Answer:

Raising the Funds through Retained Earnings

WACC = Ke(E/V) + Kp(P/V) + Kd(D/v)(1-T)

WACC = 14.7(0.36) + 12.2(0.06) + 11.1(0.58)(1-0.40)

WACC = 5.292 + 0.732 + 3.8628

WACC = 9.89%

Raising New Equity

WACC = Ke(E/V) + Kp(P/V) + Kd(D/v)(1-T)

WACC = 16.8(0.36) + 12.2(0.06) + 11.1(0.58)(1-0.40)

WACC = 6.048 + 0.732 + 3.8628

WACC = 10.64%

Difference in WACC = 10.64% - 9.89%

= 0.75%

Explanation:

WACC equals cost of equity multiplied by proportion of equity in the capital structure plus cost of preferred stock multiplied by proportion of preferred stock in the capital structure plus after-tax cost of debt multiplied by proportion of debt in the capital structure.

In this case, there is need to calculate WACC if funds were raised through retained earnings and WACC if funds were raised through new common stock. Then, we will determine the difference in WACC.

5 0

3 years ago

.The Bank of King's Landing has made many loans to the lords of Winterfell. The Bank is considering whether they will benefit or

kotykmax [81]

The Bank of King's Landing would realize an unexpected benefit when the actual rate of inflation is lower than the expected rate of inflation.

<h3>Effect of Change in Inflation Rate on Lending</h3>

In monetary economics, when the actual rate of inflation is lower than projected, the lender or bank benefits since it is similar to receiving a bonus.

The lender or the bank, on the other hand, will lose if the rate of inflation is higher than predicted.

As a result, when the actual rate of inflation is lower than the forecast rate of inflation, the Bank of King's Landing will gain unexpectedly.

The reason for this is that the amount they receive will be worth more than they anticipated when they made the loans to the lords of Winterfell.

Learn more about how inflation affects lending here: brainly.com/question/14988663.

7 0

2 years ago