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
Veronika [31]
3 years ago
6

If a typical U.S. company correctly estimates its WACC at a given point in time and then uses that same cost of capital to evalu

ate all projects for the next 10 years, then the firm will most likely
Business
1 answer:
scZoUnD [109]3 years ago
8 0

Available Options Are:

A. Become riskier over time, but its intrinsic value will be maximized.

B. Become less risky over time, and this will maximize its intrinsic value.

C. Accept too many low-risk projects and too few high-risk projects.

D. Become more risky and also have an increasing WACC. Its intrinsic value will not be maximized.

E. Continue as before, because there is no reason to expect its risk position or value to change over time as a result of its use of a single cost of capital.

Answer:

Option D. Become more risky and also have an increasing WACC. Its intrinsic value will not be maximized.

Explanation:

The reason is that different projects require different level of funding. If we are not increasing Debt and Equity at the same proportion for funding all the projects then we are actually increasing our WACC which means that the acceptability of the projects will not be appropriate here. The risk profile of all individual projects also matter because we use Ke cost of equity to calculate the WACC, which is calculated using the CAPM formula. And Beta Asset is the risk of the individual project industry which is used in the CAPM formula. All this increases the WACC which shows that the risk profile of the company has grown upwards.

Furthermore, if the WACC is higher then the intrinsic value of the projects can not be maximized and that's the reason why most firms try to have optimal level of capital structure (Percentage of equity and debt that gives lowest WACC).

Hence the option D is correct.

You might be interested in
What is business mathematics ? and what are the basics of business mathematics ?
7nadin3 [17]

Answer: Business calculation is mathematics used by industrial companies to record and maintain enterprise operations. Profit-making organizations use mathematics in accounting, catalog management, retailing, deals forecasting, and monetary analysis.

6 0
4 years ago
Read 2 more answers
Company XYZ is looking for a Finance/Accounting intern. The student filling this position will handle a wide range of important
Inga [223]

Answer:

[Today’s Date]

[Hiring Manager]  

[356 Company Address]  

[City, State xxxxx]  

Dear [Mr./Mrs./Ms.] [Name],  

Endless supply of your posting for a Finance Intern, I was anxious to present my resume for your survey. With my strong comprehension of money related arranging and examination picked up all through my instructive foundation—just as my complete capacities when all is said in done business organization and group joint effort—I feel sure that I would fundamentally profit your organization in a temporary position job.  

In getting ready to get my MBA Degree in Finance this spring from the University of XYZ I have gained an expansiveness of information and aptitudes in subjects including money related administration, speculation systems, statistical surveying and examination, business morals, bookkeeping, and operational oversight. My tender loving care and phenomenal relational aptitudes, alongside my synergistic and expert mien, position me prepared to make a considerable commitment to your association.  

My capabilities for this job incorporate the accompanying:  

  • Getting ready to exceed expectations in pivoting between cross-utilitarian money related divisions and groups to increase basic introduction to all features of the fund area while at the same time conveying key research and venture backing to drive achievement.  
  • Exceeding expectations as a gainful cooperative person, imparting thoughts and data and conveying eloquent and brief introductions and reports.  
  • Showing capability in money related research and inside and out information examination, alongside the most elevated levels of association, self-activity, and group coordinated effort.  
  • Acquiring various authority and educational honors because of extraordinary execution; graduating in top 10% of class.  
  • Accomplishing capability in Microsoft Word, Excel, PowerPoint, and Outlook, just as QuickBook's and SAP.  
  • Exceeding expectations as a beneficial cooperative person while additionally utilizing self-inspiration abilities to flourish in autonomous workplaces.  

With my ongoing scholastic involvement with account, combined with my energy and commitment to making progress, I trust I will quickly outperform your desires for this job. I anticipate examining the situation in further detail.  

Much obliged to you for your thought.  

Truly,  

XYZ

3 0
3 years ago
5. A garden plant that has been passed down within a food family and is generally not commercially grown is called a/an _______
madreJ [45]

Answer:

The correct option is D, Heirloom.

Explanation:

A garden Plant that has been passed down within a food family and is generally not commercially grown is called a Heirloom Product. Such garden plants are planted by the gardeners for their own and family use. Such plants are not sold commercially. Generally they are planted to be used within the house. Family members use such plants to make foods.

4 0
3 years ago
What is the similar about negative growth rate and zero growth rate?
kifflom [539]
The similarity of negative growth rate and zero growth rate is that there is no growth towards a positive output. For example, if the business is currently in either state, it is not earning. It may be very stagnant (for zero growth rate) or losing (for negative growth rate). Which either the case may be, it is not beneficial to the business owner. 
3 0
3 years ago
Read 2 more answers
A service is any intangible offering that involves a deed, performance, or effort that:
Artyom0805 [142]

Answer:

(A)cannot be physically possessed

Explanation:

A service is any intangible offering that involves a deed, performance, or effort that cannot be physically possessed.

A service is a transaction in which no physical good is transferred to the buyer.

Some of the major properties of Services are:

  • Intangibility
  • Perishability
  • Uniqueness

Examples of services are Education, Consultancy, Repair and maintenance services, Electricians, Plumbing , Law enforcement (provides the service of identifying and apprehending criminals)  etc.

3 0
3 years ago
Read 2 more answers
Other questions:
  • The inventory of Royal Decking consisted of five products. Information about the December 31, 2021. Inventory is as follows:
    7·1 answer
  • 5. Suppose your demand for a good is inelastic. Which word would best describe this good? normal a. inferior d. replaceable b. n
    9·1 answer
  • Richard is collecting estimates for a house that he will have the funding to build in 12 months. Which of the following factors
    10·1 answer
  • Assume Fiona is willing to pay $8 for a pizza cutter. Tim also wants one, but is only willing to pay $6 for one. At a pizza bake
    5·1 answer
  • What is the total amount of adjustments on evies tax return
    13·1 answer
  • _____ is the process of acquiring, maintaining, and growing profitable customer relationships by delivering unmatched value.
    15·1 answer
  • The prices of a certain security followa geometric Brownian motion with parameters μ = .12 and σ = .24. If the security’s price
    10·1 answer
  • Fixed expenses: a. includes labor, raw materials, and commissions. b. can be estimated by taking into consideration the producti
    9·1 answer
  • Most people in the United States were not expecting the stock market to crash.
    14·1 answer
  • Select the correct answer from each drop-down menu. when the value of a country’s currency falls, the currency is , so one unit
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!