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gizmo_the_mogwai [7]
3 years ago
12

Piedmont Hotels is an all-equity company. Its stock has a beta of .94. The market risk premium is 7.5 percent and the risk-free

rate is 3.3 percent. The company is considering a project that it considers riskier than its current operations so it wants to apply an adjustment of 2.5 percent to the project's discount rate. What should the firm set as the required rate of return for the project
Business
1 answer:
Liula [17]3 years ago
8 0

Answer:

Required rate of return for the project = 9.7%

Explanation:

The risk-adjusted discount factor = cost of equity + the adjustment

Cost of equity can be calculated using the capital asset pricing model CAPM

Using the CAPM , the rate of return on equity can be determined as follows:

E(r)= Rf +β(Rm-Rf)

E(r) =? , Rf- 3.3%, Rm- 7.5%, β- 0.94

Cost of equity = Rf + β (Rm -Rf)

Cost of equity = 3.3% + 0.94×(7.5-3.3)= 7.248

The risk-adjusted discount factor=  7.248 + 2.5= 9.748

Required rate of return for the project = 9.7%

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Answer:

Collaborative relationship

Explanation:

Here, it requires at least 2 parties to consent to this and the aim is to allow mutual benefits between both parties where they both benefit from each other. Thus, with this, more resources can be pumped to get the appropriate supply that is technologically advanced and equipped to to be used to foster the business

7 0
3 years ago
Cereal is an example of a consumer product, where many ________ cost comprehensive prototypes are built since the product has __
Ilia_Sergeevich [38]

There are different types of prototype decisions. Cereal is an example of a consumer product, where many low cost comprehensive prototypes are built since the product has high market risk.

There are different kinds of Prototype Decision when looking at the technical risk compared to the prototype cost. They are:

  • Low risk - low cost (printed stuff) : Here, there is no need for comprehensive prototypes.

  • Low risk - high cost (ships, buildings) : Here, there is no way one can afford comprehensive prototype.

  • High risk - low cost (software) : Here, there a a lot of comprehensive prototypes.

  • High risk - high cost (airplanes, satellites) : This often make use of analytical models a lot, have a well throughout planned of comprehensive prototypes

Prototyping is simply known to be the estimation or approximation of the product with its one or more areas of interest.  It has 2 kinds which are Physical prototypes vs. analytical prototypes , Comprehensive (with all the attributes of a product) vs. focused.

Learn more about Prototyping from

brainly.com/question/7509258

4 0
2 years ago
Under GASB standards, financial information useful for assessing operational accountability is primarily reported in which finan
ANEK [815]

Answer: b. Yes; No

Explanation:

The Government Accounting Standards Board (GASB) is simply a non-governmental organization which is private that helps in the creation of accounting reporting standards, for both states in the United States and the local governments.

Under GASB standards, financial information useful for assessing operational accountability is primarily reported in the Government wide financial statements and not the Fund Financial statements.

7 0
3 years ago
If a country were to place a limit on the number of cars that could be imported in a year, it would be an example of what kind o
gizmo_the_mogwai [7]
Subsidy imported. trade regulation
6 0
2 years ago
WinterDreams operates a Rocky Mountain ski resort. The company is planning its lift ticket pricing for the coming ski season. In
Kitty [74]

Answer:

a. Would Mountain Point emphasize target pricing or cost-plus pricing? Why?

  • They emphasize cost plus pricing because the investors are seeking a desired rate of return on their investment and they do it by adding the desired profit margin to their costs.

b. If other resorts in the area charge $66 per day, what price should Mount Snow charge?

  • $75.50 in order for them to generate the required ROI. Since the resort has a very good reputation, it can charge a higher price than its competitors.

Explanation:

company's assets = $115,000,000

expected return on investment = 16%

fixed costs = $35,600,000

number of customers = 800,000

variable costs = $8 per customer x 800,000 = $6,400,000

total costs = $42,000,000

total cost per client = $42,000,000 / 800,000 = $52.50

desired profit = $115,000,000 x 16% = $18,400,000

desired profit per client = $18,400,000 / 800,000 = $23

price per ticket = $75.50

8 0
3 years ago
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