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shusha [124]
3 years ago
10

Using a company's cost of capital to evaluate a project is:

Business
1 answer:
yaroslaw [1]3 years ago
6 0

Answer: Option C  

             

Explanation: In simple words, cost of capital refers to the amount of return that the investor are expecting for tasking the risk of investing in the company. In other words, it is the amount the company has to offer in return to the investors for attaining the capital from the market.

Often the cost of capital is used to evaluate the profitability of the project, that is, if the return in project is higher than the cost of financing it should be taken by the company.

However there are other component while evaluating a project that is risks associated with it. Risk of every projects is different from the other and hence only those project should be evaluated on the basis of cost of capital that is similar to the company's average.

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The XYZ Chemical Company must ship 9,500 gallons of pesticides from its plant in Cincinnati, Ohio, to a customer in Columbia, Mi
never [62]

Answer:

Henderson  = $1,200

Central States = $1,000

Based on the calculations, Central States Railroad is better at a lower cost than Henderson

Explanation:

The question is to do an evaluation of the costs of use Henderson Bulk Trucking Company or the Central States Railroad

Step 1) Determine the cost of using Henderson

What is the cost per tank  truck = $600

What is the capacity in gallons = 700 galloons

However, since XYZ Chemical needs to ship 9,600 gallons, it means it will make use of 2 trucks from Henderson as follows

The cost of Henderson Bulk Trucking = $600 x 2 = $1,200

Step 2) Determine the cost of using Central Railroad

What is the cost per tank  truck = $1000

What is the capacity in gallons = 23,500 galloons

since XYZ Chemical needs to ship 9,600 gallons, it means it will make use of only one of the trucks

The cost of Central Roilroad= $1000 x 1 = $1,000

Based on the calculations, Central States Railroad is better at a lower cost than Henderson

3 0
3 years ago
A well-written job description should:
Yakvenalex [24]
C. clearly outline the job's responsibilities.
I hope that helps! :)<em />
6 0
3 years ago
You are sitting around the fire at a lodge in Dillingham, Alaska, discussing a fishing expedition you are planning with your col
maw [93]

Solution :

Risk management first involves the identification of the potential risk that may be involved. It should focus both on the objectives as well as events that could cause the consequences.

Some of the major risks that can be involved are :

• sudden weather conditions which may not support the flight travel.

• Embargo on fishing by the State or local authority suddenly

• any kind of physical injury to the members of the group

• there may be forest fire around the lake

• technical error that might occur during the course of adventures

The impact for the risk that includes the majuere risk will be very high for all the parameters that can increase the cost by 40%, it can also lead to increase in time by about 20% which can cancel the expedition. . These types of risk will not be covered under any scope.

For the physical risk, the impact will be moderate for the parameters.

                            Risk Response Matrix

Risk         Response        Contigency plan         Trigger     Who is responsible

Force        Mitigate      Choosing another      Situation is               Nils

Majuere                        destination as a back  not clear in

                                        up.                               24 hours.

Physical   Mitigate      Proper training and     After observing       Eddie

injury                           safety kits                     the participants

7 0
2 years ago
Assume again that the cost of capital is 7 percent and the effective tax rate is 40 percent. How would the payback, internal rat
vfiekz [6]

Answer:

If the effective tax rate increases then the net savings coming from investments will get lowered as a result the investment will have higher payback period (The increase in effective tax rate would lower demand of the product which means there is decline in net saving arising from the sale of the product). Likewise this decrease in annual net savings will also decrease the internal rate of return which shows that their are increased chances of project rejections. The NPV method is based on cash flows and relevant costing just like IRR and payback method but the only difference is that it assumes that the cash earned would be reinvested at cost of capital. The NPV will also decrease due to increased effective tax rate.

4 0
3 years ago
You need $20,000 to purchase a used car. Your wealthy uncle is willing to lend you the money as an amortized loan. He would like
Serga [27]

Answer:

The annualy payment for theamortized loan is $6,802.44

Explanation:

First we will find the total loan payment TP for the $20,000 borrowed over the next four years with a annual return of 8%:

TP = $20,000 *(1+8%)^4

TP = $20,000 *(1.08)^4

TP = $20,000 *1.3605 = $27,209.7

The annual payments AN is obtained by dividing the TP into the 4 years:

AN  = $27,209.7 / 4 = $6,802.44

4 0
3 years ago
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