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never [62]
3 years ago
5

Two mutually exclusive investment opportunities require an initial investment of $7 million. Investment A pays $1.5 million per

year in perpetuity, while investment B pays $1.2 million in the first year, with cash flows increasing by 3% per year after that. At what cost of capital would an investor regard both opportunities as being equivalent
Business
1 answer:
Nataly_w [17]3 years ago
4 0

Answer:The cost of capital that will make both investments equal is 17.045%

Explanation:

Investment A

$1.5 million will be received in perpetuity we can there use perpetuity formula to Value investment A.

Value of Investment A = 1500 000/r

Investment B

$1.2 Million will be received in Investment B with a growth rate of 3% will then use Gordon's growth rate model to value investment B.

Value of investment B = (1200 000 x (1+0.03))/(r - 0.03)

Value of investment B = 1236000/(r - 0.03)

1500 000/r = 1236000/(r - 0.03)

1236000(r) = 1500000(r - 0.03)

(r - 0.03) = 1236000( r)/1500000

r - 0.03 = 0.824r

r - 0.824r = 0.03 = 0.176r = 0.03

r = 0.03/0.176 = 0.170454545

R = 17.045%

The cost of capital that will make both investments to be equal is 17.045%

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sp2606 [1]

Answer:

Attrition

Explanation:

The right answer to the question is attrition and what is attrition in business sense: is simply means a situation where organization staff strength gradually and deliberately reduces as employees retire or resign and are not replaced.

So in this case Maria retire and nobody was hired to replace her position in the company and again all her subordinates were reassigned to other departments. It is also worth noting that attrition could also be a way of a company is losing her customer base as a result of other factors

6 0
3 years ago
Legislation defining the mission of the Federal Reserve​ states: "The Board of Governors of the Federal Reserve System and the F
jeka57 [31]

Answer:

dual mandate.

Explanation:

dual mandate -

It is the practice in which the elected officials serves in more than one elected or public position .

In Britain , this term is also referred to as double jobbing .

In some cases , the dual mandate is prohibited by the law , as in the case of the federal states , because the federal office holders are not allowed to hold state office .

Hence  from the question information , the correct option is dual mandate .

5 0
3 years ago
Martin Corp. permits any of its employees to buy shares directly from the company through payroll deduction. There are no broker
Rashid [163]

Answer: $57,000,000

Explanation:

The employees purchased at a 20% discount which means that this 20% discount is the amount that would have to be covered by the company's pretax earnings:

= 19,000,000 * 15 * 0.2

= $57,000,000

<em>Martin's pretax earnings will be reduced by $57 million because the company would have to cover the discount on the shares. </em>

8 0
3 years ago
Than Wok emigrated from his war-torn country to the United States almost two years ago. He recently found a job working on an as
igor_vitrenko [27]

Answer:

C.social needs.

Explanation:

Maslow's hierarchy of needs is a motivational theory that goes through five forms of needs set out below:

1. Physiological needs: These are the survival needs i.e. food, clothing, house, air

2. Security needs: This need covers human, financial, etc. protection and security

3. Social needs: These needs represent an person being or not involved in social groups. It makes the person not feel alone, lonely, etc.

4. Awareness needs: Awareness needs are the recognition he or she receives

5. Self-actualization needs: As the name suggests, it is self-actualizing in order to let the person know about his or her abilities.

So according to the given options, the most appropriate option is C. as it shows the social needs i.e loneliness, alone, etc

4 0
3 years ago
A lot of designer clothing companies will send free clothes to celebrities with hopes that the celebrities will wear their cloth
Kazeer [188]

Answer:

Celebrity endorsement.

Explanation:

The complete question is...

A lot of designer clothing companies will send free clothes to celebrities with hopes that the celebrities will wear their clothing in public and attract more customers to the brand. what mode of end? What mode of endorsement are these clothing companies trying to achieve?

Celebrity endorsement uses a celebrity's fame or social status to promote a product, brand or service. It is mostly associated with the fashion and beauty brands, and the goal is that the positive image of the celebrity be reflected onto the product or the brand. Celebrity endorsement has been used by some brands to promote their businesses into a multi-billion dollar company, and is also very lucrative for the celebrity, whose contract deals can run into hundreds of millions of dollars.

8 0
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