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
What is the total of tim’s liabilities if he has recorded $50,000 in assets and $40,000 equity on a balance sheet?
miss Akunina [59]

Total assets = Total liabilities + Total stockholders' equity

Total liabilities = Total assets - Total stockholders' equity

Total liabilities = $50,000 - $40,000

Total liabilities = $10,000

Hence, the total of Tim's liabilities is $10,000.

Responsibility is the responsibility of the individual or company and is usually the amount. Debts are settled over time by the transfer of economic interests, including money, goods, or services. The liabilities shown on the right side of the balance sheet include loans, liabilities, mortgages, income receivable, borrowings, guarantees, and accrued expenses.

Liability can be compared to assets. Debt is what you owe or owe. An asset is something you own or owe. In general, liability is an obligation between one party and another that has not yet been exempted or paid. In the accounting world, financial liabilities are also obligatory but are more likely to be defined by past commerce, events, sales, asset or service exchanges, or those that will generate economic benefits in the future.

Learn more about Liability here: brainly.com/question/24534918

#SPJ4

7 0
2 years ago
A producer's market means higher prices.<br><br><br> True False
ahrayia [7]
The answer is True .
6 0
3 years ago
Brainliest Answer!!! <br> Five reasons why travel and tourism industry is important in the U.S.
vodomira [7]
Brings income and makes the economy better 
7 0
3 years ago
When actual revenue ______ what the revenue should have been, the variance is labeled favorable.
xeze [42]

When actual revenue <u>exceeds</u> what the revenue should have been, the variance is labelled favourable.

Hope that helps!

6 0
2 years ago
Read 2 more answers
Fortune Company had beginning raw materials inventory of $16,000. During the period, the company purchased $92,000 of raw materi
elixir [45]

Answer:

The amount of raw materials transferred to work in process is $98,000.

Explanation:

Given that, at the beginning of its business operations, Fortune Company had a raw material inventory of $ 16,000 and that, during the business year, it acquired another quantity of raw materials for $ 92,000, the total of raw materials in the company's stock had a total value of $ 108,000 (16,000 + 92,000).

Now, if at the end of the balance the value of the raw materials was $ 10,000, the amount of raw material that was incorporated into the production process was a value of $ 98,000 (108,000 - 10,000).

8 0
3 years ago
Other questions:
  • An individual s ethical beliefs are influenced by his/her social group and culture. True or False
    12·1 answer
  • Opal asks Paolo, who does not understand English, to sign what Opal says is an application to open a bank account. In fact, the
    8·1 answer
  • ____________ serve as a central contact point where critical comments, dilemmas, and advice can be assigned to the person most a
    9·1 answer
  • Content theories attempt to explain work behaviors based on __________.
    8·1 answer
  • Martin Company needs additional time to pay its accounts payable to Boster Company. Martin makes a written promise to pay Boster
    12·1 answer
  • Vaughn’s Manufacturing Company can make 100 units of a necessary component part with the following costs: Direct Materials $1270
    7·1 answer
  • Assume that Solo Company commenced operations on January 1, 2006, and it was granted permission to use the same depreciation cal
    5·1 answer
  • Crest toothpaste has selected new moms as their target market. In the process of positioning their new product BabySafeToothpast
    10·1 answer
  • Hi! I need help with this
    13·1 answer
  • Which of the following is an advantage of a centralized purchasing department? a. Less bureaucracy b. Specialization c. Closer c
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!