All categories

4 years ago

An all-equity firm is considering the following projects:

Business

1 answer:

Elza [17]4 years ago

5 0

Answer:

Project Y and Project Z

Project X and Project Y

Project X and Project Z

Explanation:

Apply the CAPM to calculate the required return for each project as followed:

Project W: 4% + 0.75 * (11%-4%) = 9.25%

Project X: 4% + 0.90 * (11%-4%) = 10.3%

Project Y: 4% + 1.15 * (11%-4%) = 12.05%

Project Z: 4% + 1.45 * (11%-4%) = 14.15%

So, for:

Which projects have a higher expected return than the firms 11 percent cost of capital: Project Y 12.8% and Project Z 13.9% which are given.

Project should be accepted is project that has expected returns higher than required return which is Project X and Project Y.

Using the firm's overall cost of capital as a hurdle rate:

Project Z will be accepted which is incorrect because its Required returned is higher than its expected returns ( 14.15% > 13.9%)

Project X will be rejected which is incorrect because its Required returned is lower than its expected returns ( 10.3% < 10.8%).

You might be interested in

State the 5 most important banking services and rank them in order that you feel most important.

lukranit [14]

Answer:

checking account, savings acc, debit and credit cards, insurance , wealth management

Explanation:

4 0

3 years ago

A supplier of instrument gauge clusters uses a kanban system to control material flow. The gauge cluster housings are transporte

defon

Answer:

$N=\frac{5*2(1+0.4)}{6}\\N=2.333\ kanban\\$

Rounded to next whole number:

N=3 kanban card sets

Explanation:

Given:

Number of gauges per hour=D=5 gauges per hour

Gauge cluster housing Transported=C=6

Hours for housing replenishment = T=2 hours

Safety Stock Percentage=P=40%

Find:

Number of kanban card sets needed=N=?

Solution:

Formula According to above mentioned Alphabets

$N=\frac{D*T(1+P)}{C}$

$N=\frac{5*2(1+0.4)}{6}\\N=2.333\ kanban\\$

Rounded to next whole number:

N=3 kanban card sets

7 0

4 years ago

Imagine you are a consultant who has been asked to summarize the strengths and weaknesses of Customaria, a nation with a pure tr

zavuch27 [327]

Answer:

There is little cooperation, relative to other economies.

The participants in the economy are slow to adopt new beneficial technologies due to previous customs.

Occupational choices can be restricted.

Explanation:

<em>Traditional economies</em> are old economy types that rely mainly on barter as a a mean of exchange. Their customs and tradition hinder changes related to technology, showing high resistance to change. Since economy is mainly based in the primary economy sector, occupational choices are usually limited for inhabitants.

There is the absence of international trade, as barter is the reigning exchange method done only inside the country.

7 0

3 years ago

On January 1 of the current year, the Queen Corporation issued 7% bonds with a face value of $76,000. The bonds are sold for $73

babunello [35]

Answer:

$5,776

Explanation:

the journal entry to record the issuance of the bonds:

January 1, 202x

Dr Cash 73,720

Dr Discount on bonds payable 2,280

Cr Bonds payable 76,000

coupon = $76,000 x 7% x 1/2 = $2,660

discount on bonds payable per coupon = $2,280 / 10 = $228

Journal entry to record coupon payment:

June 30 and December 31, 202x

Dr Interest expense 2,888 x 2 = 5,776

Cr Cash 2,660 x 2 = 5,320

Cr Discount on bonds payable 228 x 2 = 456

3 0

3 years ago

An industrial producer is searching for a supplier for ball bearings. Its three most important supplier criteria are price, qual

8090 [49]

Answer:

D) 74

Explanation:

Weighted avg rating for suppliers can be calculated as follows.

First lets arrange the data,

Price 40

Quality 90

Delivery reliability 75

For a total weight sum of 100%, weights can be distributed as

Price 20%

Quality 40%

Delivery 40%

thus weight for the supplier then is,

Weight = (40*0.2) + (90*0.4) + (75*0.4) = 74

Hope that helps.

4 0

3 years ago