1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
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%

You might be interested in
Jonathan has always been interested in computers. He consistently reads computer magazines, attends various seminars on computer
SashulF [63]

Answer:

The correct answer is:  Ongoing Search.

Explanation:

Ongoing Search is the act by which an individual gathers information about certain topics because the search itself is pleasurable for that person. This type of search is not usually carried out with the intention of getting revenues from it but it could lead the individual to get more knowledge on a certain matter.

6 0
3 years ago
If a bank is offering a higher interest rate of return to investors, the MOST LIKELY impact on borrowers from the same bank is
never [62]
The answer is D. An increased interest rate. The bank will increase the interest rates on loans to get a return on their expences.
7 0
3 years ago
Read 2 more answers
discuss the rationale of organizing an industrial strike in resolving employee dispute with the state,focusing on the detrimenta
Gennadij [26K]

Answer: The answer is given below

Explanation:

Strike is the refusal to work which is typically organized by body of employees as a method of protesting in an attempt to get a pay rise or other concessions from the employer.

Strike can be as a result of demand for wages or salary increment, better working conditions, better treatment at workplace and non-discrimination, towards employees.

Strikes can bring about potential benefits such as better working conditions, increase in pay, improved labor productivity, increase in work morale, and lower absenteeism. Itcsn also bring about economic costs to the society. Strikes results in negative impacts on employees, employers, consumers, stakeholders, the government, and the whole economy.

During strikes, there are less goods available for consumers, decrease in revenue on the part of employers, idle employees, and the economy is also affected badly.

6 0
3 years ago
In evaluating the profit center manager, the income from operations should be compared a.across profit centers b.to historical p
olya-2409 [2.1K]

Answer: to historical performance or budget

Explanation:

A profit center in a business is a division that is able to make revenues independently and contribute to the revenue of the entire business. In evaluating the performance of a profit center manager, it is best to compare the performance to a budget or their historical performance.

This is because profit centers engage in different businesses and so their revenue making style will be unique. Some profit centers will make more than others because of the goods they produce or the way they produce it. It is therefore best to compare a profit center to an internal measure such as the budget and historical performance.

If the profit center exceeds either of these then they are performing well.

6 0
3 years ago
Coins, currency, demand deposits and travelers checks fit what definition of money supply?
Levart [38]

the answer is in fact M1

6 0
3 years ago
Other questions:
  • Talbot purchased a laptop for $1,500 and a television for $1,300. The laptop is used solely for business and the television sole
    13·1 answer
  • Kilgore Company experienced the following events during its first accounting period. (1) Issued common stock for $5,000 cash. (2
    13·1 answer
  • Which of the following are correct concerning customer background and financial information, according to options exchange rules
    13·1 answer
  • This partnership was approached by a corporation that would like to acquire them by a stock acquisition. The partnership has no
    14·1 answer
  • Banking is a general term of what
    5·1 answer
  • Discuss business rules. How do you translate business rules into data-model and database? Provide few examples.
    11·1 answer
  • g Which of the following is true? Partial equilibrium analysis will:3)A)understate the impact of a tax for complements and overs
    11·1 answer
  • Stores that carry a broad product line, with limited depth, are referred to as
    8·1 answer
  • The economy of the gilded age was characterized by economic growth and high unemployment among unskilled workers. rapid economic
    6·1 answer
  • Profitability measures such as return on assets (roa) and return on equity (roe) are ___ rates of return.
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!