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Cloud [144]
3 years ago
8

Piedmont Hotels is an all-equity firm with 48,000 shares of stock outstanding. The stock has a beta of 1.19 and a standard devia

tion of 14.8 percent. The market risk premium is 7.8 percent and the risk-free rate of return is 4.1 percent. The company is considering a project that it considers riskier than its current operations so has assigned an adjustment of 1.35 percent to the project's discount rate. What should the firm set as the required rate of return for the project?
Business
1 answer:
user100 [1]3 years ago
8 0

Answer:

The firm set as the required rate of return for the project is 14.732%

Explanation:

For computing the required rate of return, the following formula should be used which is shown below:

= Risk free rate of return + (Beta × market risk premium) + adjustment

where,

Risk free rate of return is 4.1%

Beta is 1.19

Market risk premium is 7.8%

Adjustment is 1.35%

Now put these values to the above formula

So, the value wold be equal to

= 4.1% + (1.19 × 7.8%)+ 1.35%

= 4.1% + 9.28% + 1.35%

= 14.732%

The standard deviation is irrelevant. Therefore, it is not considered in the computation part.

Hence, the firm set as the required rate of return for the project is 14.732%

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The replacement of a planning machine is being considered by the Reardorn Furniture Company.​ (There is an indefinite future nee
Yuliya22 [10]

Answer:

We have the comparison below

Explanation:

                                                     1          2           3

Expenses for the year 20000    27000      34000

PVIF at 12%                      0.89286   0.79719      0.71178

PV of expenses                 17857    21524       24201

Cumulative PV of expenses 17857 39381 63582

EOY MV                                        -1000 -1750 -2500

PV of MV                                 -893 -1395 -1779

Total PW (4000+ PV of expenses - PV of MV) 22750   44776    69361

P/A                                            0.89286 1.69005 2.40183

EUAC                                     25480 26494 28879

3 0
3 years ago
A country is currently producing bricks and spatulas using all of their resources and satisfying the wants of their economy. If
makkiz [27]

Answer:

C. The country will have a smaller marginal return from bricks.

Explanation:

This is because it will lead to an increased production in the economy and ppf will shift outward.

5 0
2 years ago
Suppose the dollar appreciates relative to foreign currencies. If U.S. firms have domestic content below 100%, the harm to domes
inn [45]

Answer:

The correct answer is: If U.S. firms have domestic content below 100%, the harm to domestic firms is less than the harm if U.S. producers had domestic content of 100%.

Explanation:

This strength of the dollar, which is reflected in exchange rates, has negative and positive implications at the same time for any economy.

What benefits one sector damages the purchasing power of another.

If it is good for those who receive remittances, it is bad for those who want to travel or do business abroad.

Businesses and governments also have to deal with a phenomenon that affects all aspects of the economy.

Importing oil or gas, repaying debt or contracting services abroad can cost more or less depending on exchange rates.

In general terms, that a currency depreciates against the dollar if it has a very intensive international trade with the United States, as is the case in Mexico, causes its economy to be more competitive and drives growth.

This is because American consumers can compare cheaper products made in Mexico.

So in terms of growth, this is a positive effect of the depreciation of a currency and the strength of the dollar.

The increases in interest rates made by the Federal Reserve, the body in charge of dictating the course of monetary policy in the United States, have led to a progressive general strengthening of the dollar against all currencies.

When the US central bank cuts interest rates, it encourages banks to lend more and put more money in the hands of citizens and businesses. And the opposite happens when, as now, the rates rise. Banks lend less and the dollar appreciates.

5 0
3 years ago
The wage theory that states that differences in wage rates are determined by collective bargaining is the
shtirl [24]
The correct answer for the question that is shown above is this one: "c. theory of negotiated wages." The wage theory that states that differences in wage rates are determined by collective bargaining is the theory of negotiated wages. C<span>ollective bargaining is a process of negotiations between employers and the representatives of a unit of employees aimed at reaching agreements that regulate working conditions. </span>

8 0
3 years ago
Daniel is the owner of a footwear manufacturing company. To increase the production of footwear on a weekly basis, he orders his
alexandr1967 [171]

Answer:

According to the Blake/Mouton grid, Daniel falls under the produce-or-perish management style, also known as the authority compliance style  

Explanation:

This management style is very autocratic, very much a Theory X management style.

Daniel is very autocratic, has strict rules and policies. In the short run, this management style can achieve high productive results, but in the long run the low morale of the workers will end up hurting their performance. Daniel believes that his employees are just a means to an end, and that their needs are secondary and not important.

7 0
2 years ago
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