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
svp [43]
4 years ago
9

Based on market values, Gubler's Gym has an equity multiplier of 1.56 times. Shareholders require a return of 11.31 percent on t

he company's stock and a pretax return of 4.94 percent on the company's debt. The company is evaluating a new project that has the same risk as the company itself. The project will generate annual aftertax cash flows of $297,000 per year for 9 years. The tax rate is 40 percent. What is the most the company would be willing to spend today on the project?
Business
1 answer:
VMariaS [17]4 years ago
8 0

Answer:

$1,831,342.6

Explanation:

Firstly, we need to calculate weighted average cost of capital (WACC) for Cannoli Corp:

WACC = Weight of equity x Cost of equity + Weight of debt x Pretax cost of debt x (1 - Tax rate)

           = (1/1.56) x 11.31% + (1 - 1/1.56) x 4.94% x (1 - 40%)

           = 8.314%

Next, we need to calculate present value (PV) of all cashflow of this project:

PV = CF1/(1 +  WACC) + CF2/(1 +  WACC)^2 + ... + CF9/(1 +  WACC)^9

     = 297,000/(1 +  8.314%) + 297,000/(1 +  8.314%)^2 + ... + 297,000/(1 +  8.314%)^9

     = 1,831,342.6

The maximum price that the company would be willing to spend for this project is its PV of $1,831,342.6

You might be interested in
1. Why is it valuable for a worker to understand the business of the
kkurt [141]

Answer:

huh?

Explanation:

5 0
3 years ago
Among the budget cuts that the city council is considering is a 5 percent reduction in funds for secondary education. As the pri
Elina [12.6K]

Answer:

1 - What solution would you offer if you were Stella and there were budget cuts in your school?

Instead of cutting the class for bright students, all three classes should continue, but with fewer funds. In other words, the funds should be reduced accross the classes.

2 - Is Stella right that bright kids will do well no matter what? Explain your answer.

She is partly right. Bright kids are likely to do well in most situations, however, this does not mean that all bright kids will do well in most situations, or that they will do better in an average classroom, than in a classroom that is catered to them.

3 - At what age is intelligence set? Is there anything you can do to improve your intelligence score on an IQ test?

According to most recent research, the brain seems to mature when a person is in the mid-20s, however, this does not mean that intelligence is "set" at that moment. Intelligence can be improved during most of adult life.

To do better on an IQ test, a person should have healthy habits, and should also incurr in metal stimulation: puzzle, mental games, studying a language, and so on.

4 - Should gifted students and below average students be integrated into the same class? Explain.

Ideally no. If the students are very gifted, they will simply get bored. However, in case it happens, it can also have a positive effect and that is the bright students will probably end up helping the average students.

5 0
3 years ago
Internal controls that should be applied when a business takes a physical count of inventory should include all of the following
irina1246 [14]

Answer:

e) Counters of inventory should be those who are responsible for the inventory.

Explanation:

Having different people do the physical counting of inventory guarantees the integrity of the count. The staff in charge of inventory are probably aware of any variances as they conduct regular checks. Having different people count eliminates the possibility of number manipulation by the staff responsible for the stock.

Before a stock count, all operations should be halted. Items received during the stock count should be separated and not counted. There should be a document giving instructions to staff to ensure consistency.

As a measure of internal control, all stocks should be identified with a numbered tag. The supervisor should ensure proper tagging has been done. Where possible, counters will be organized in teams of two so that each item goes through two counts. Assign groups to count items which are not in their direct responsibility. Should there be a variance, a separate team should be allowed to counter check.

8 0
3 years ago
What is the name of the company that made and had their own branding on unofficial nintendo entertainment games.
Sidana [21]

Tengen is the name of the company that made and had its own branding on unofficial Nintendo entertainment games.

<h3>Tengen</h3>

It was incorporated on December 21, 1987. In 1988, Tengen emitted its first and only three games authorized by Nintendo: R.B.I. Baseball, Pac-Man, and Gauntlet. Meanwhile, Tengen privately worked to avoid Nintendo's lock-out chip called 10NES which granted it control over which games were published for the NES.

<h3>Nintendo Co., Ltd.</h3>

Nintendo Co., Ltd. is now the biggest video game business by revenue, as a Japanese multinational customer electronics corporation headquartered in Kyoto, Japan.

To learn more about Nintendo visit the link

brainly.com/question/15698254

#SPJ4

8 0
2 years ago
What is the present value of a security that will pay $34,000 in 20 years if securities of equal risk pay 8% annually? Round you
OLga [1]

Answer:

present value = $7296.14

Explanation:

given data

future value =  $34,000

time t = 20 year

rate r = 8% = 0.08

solution

we apply here future value formula for get present value that is

future value = present value × (1+r)^{t}    .....................1

put her value and we get

$34,000 = present value ×  (1+0.08)^{20}

present value = \frac{34000}{1.08^{20}}

present value = \frac{34000}{4.660}

present value = $7296.14

4 0
3 years ago
Other questions:
  • Angie asks her grandmother over the phone, "do you like the color of my new shirt that i'm wearing now?" this is an example of
    11·1 answer
  • The united states' first large business bureaucracies began within which industry?
    10·1 answer
  • The Flores Family loves to go sailing on the weekends. Mr. Flores has decided to purchase a more spacious sailboat. The sailboat
    11·1 answer
  • A person can have only one dominant intelligence
    6·1 answer
  • Internet advertising has emerged as a media option of great opportunity for advertisers because of its superior target market se
    11·1 answer
  • (1 pt) The manager of a large apartment complex knows from experience that 90 units will be occupied if the rent is 420 dollars
    10·1 answer
  • When Amway entered China, it opened up retail locations for the first time. Amway is a direct selling firm. This means that it s
    15·1 answer
  • You manage an equity fund with an expected risk premium of 10% and an expected standard deviation of 15%. The rate on Treasury b
    15·1 answer
  • Healy Corporation recorded service revenues of $200,000 in 2014, of which $80,000 were on credit and $120,000 were for cash. Mor
    14·2 answers
  • What alternatives are available to brent in regards to the audit of payables? what are the pros and cons of each alternative?
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!