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Elis [28]
3 years ago
9

Suppose a firm has evaluated four capital budgeting projects and, using one of the time value of money-capital budgeting techniq

ues, has determined that all of the projects are acceptable. If the projects are mutually exclusive, which of the following capital budgeting techniques should be used to make the purchasing decision to ensure the firm's value is maximized?
traditional payback period (PB)

the internal rate of return (IRR)

modified internal rate of return (MIRR)

net present value (NPV)
Business
1 answer:
Dima020 [189]3 years ago
6 0

Answer:

The answer is: the following three should be used.

  • net present value (NPV)
  • traditional payback period (PB)  
  • the modified internal rate of return (MIRR)

Explanation:

First of all, the NPV of the four projects must be positive. Only NPV positive projects should be financed. If the NPV is negative, the project should be tossed away. This is like a golden rule in investment.

Now comes the "if" part. What does the company value more, a short payback period or a higher rate of return.

If the company values more a shorter payback period (usually high tech companies do this due to obsolescence), then they should choose the project with the shortest payback period.

If the company isn't that concerned about payback periods, then it should choose to finance the project with the highest modified rate of return. This means that the most profitable project should be financed.

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for $32.45 per share, and the firm expects its per-share dividend to be $2.35 in one year. Analysts project the firm’s growth ra
Serggg [28]

Answer:

Cost of equity will be 12.96 %

Explanation:

We have given current price of the stock = $32.45

Expected dividend D_1=$2.35 in one year

Growth rate g=5.72%=0.0572

We have to find the cost of equity

Cost of equity is given by

Cost of equity =\frac{expected\ dividend}{current\ price\ of\ the \ stock}+growth\ rate=\frac{2.35}{32.45}+0.0572=0.1296 = 12.96 %

8 0
2 years ago
The two basic sources of​ stockholders' equity are​ ________.
Radda [10]
<span>The two basic sources of​ stockholders' equity are​ paid-in capital and retained earnings. Stockholders' equity is represented by the equity stake that is held on the books by a firm's equity investors. Paid-in capital is the amount of money (capital) that is paid in by the </span>investors when common or preferred stock being issued. Retained earnings are shown as a percentage of the net earnings that are not paid out as dividends but kept in the corny to be reinvested. 
5 0
3 years ago
On March 15, American Eagle declares a quarterly cash dividend of $0.075 per share payable on April 13 to all stockholders of re
slava [35]

Answer:

The Journal entries are as follows:

(i) On March 15,

Dividend [0.075×220,000,000] A/c    Dr. $16,500,000

To dividend payable                                                         $16,500,000

(To record the declaration of cash dividends)

(ii) On March 30,

No Journal entry required

(iii) On April 13,

Dividend payable A/c   Dr. $16,500,000

To cash                                                       $16,500,000

(To record the payment of cash dividends for its 220 million shares)

6 0
3 years ago
Use the following information to answer the next question. Harvey quit his job at State University where he earned $45,000 a yea
algol [13]

Answer: Option(a) is correct.

Explanation:

Total Revenue = Units sold × price per unit sold

                        = 11,000 × $75

                        = $825,000

Explicit cost = Units sold × cost per unit

                    = 11,000 × $55

                    = $605,000

Implicit cost = Earning at state university + Entrepreneurial talent + cash bonds at 10% interest

                    = $45000 + $5,000 + ($100,000 × 10%)

                    = $60,000

Economic profits = Total Revenue - (Explicit cost + Implicit cost)

                            = $825,000 - ($605,000 + $60,000)

                            = $825,000 - $665,000

                            = $160,000

7 0
3 years ago
Who sent John this W-2?
VMariaS [17]
John's employer did, as W-2 forms are sent to employees and the IRS by employers.
3 0
2 years ago
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