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
SCORPION-xisa [38]
4 years ago
8

As a financial analyst, you are tasked with evaluating a capital-budgeting project. You were instructed to use the IRR method, a

nd you need to determine an appropriate hurdle rate. The risk-free rate is 4%, and the expected market rate of return is 11%. Your company has a beta of 0.67, and the project that you are evaluating is considered to have risk equal to the average project that the company has accepted in the past. According to CAPM, the appropriate hurdle rate would be
Business
1 answer:
ozzi4 years ago
5 0

Answer:

Ke 0.08690 = 8.69%

Explanation:

<u>The capital assets price model formula(CAPM) is as follows:</u>

Ke= r_f + \beta (r_m-r_f)  

risk free       = 4% = 4/100 = 0.04

market rate = 11% = 11/100 = 0. 11

premium market: (market rate - risk free) = (0.11-0.04) = 0.07

Beta(non diversifiable risk) 0.67

Ke= 0.04 + 0.67 (0.07)  

Ke 0.08690

You might be interested in
You are analyzing cost data for your boss related to a special order your company is considering from a large customer in Singap
valkas [14]

Answer:

In surrounding the appropriate response, it is accepted that units are 1000 of the request.  

In this manner complete commitment would be:  

Sales = 49950  

Variable Costs = 10500  

Variable Selling Exp = 18250  

Contribution = 21200  

Since client is demanding to keep commitment at certain level, it wont be advantageous for the organization since organization wont gain same measure of $ 21200 as commitment in such circumstance when it needs to pay $ 5000 extra for the custom discharge despite the fact that selling costs would be eliminated and figures would be this way:  

Sales = 23320  

Variable Costs = 10500  

Variable Selling Exp = 0  

Contribution = 12820  

Part 1: Accounting issues:  

  • This would present bookkeeping dilemma to report deals at not exactly the value charges to different clients  
  • There would be accounted for misfortune if request acknowledged  

Moral issues:  

  • Different clients would feel off-base as we would be caring a lot more significant expense to them  
  • Representatives may likewise be snorted in light of the fact that additional time charges may not make up for the time went through with the family
3 0
3 years ago
Depreciation is a source of cash inflow because
vazorg [7]

Answer: a. it is a non-cash expense, so it needs to be added back to net income when using the indirect method.

Explanation: Depreciation is the measurement of the decline in value of assets. When using the indirect method, since net income is a starting point in measuring cash flows from operating activities, depreciation expenses must be added back to net income. Depreciation is a source of cash inflow because it is a tax-deductible non-cash expense as a result it provides a tax reduction benefit which increases cash flow.

6 0
3 years ago
When categorizing investments for the financial account component of the balance of payments the ________ is an investment where
boyakko [2]

Answer:

The answer is B.Portfolio Investment and direct Investment.

Explanation:

Portfolio Investments are investments made in a group of assets (equity, debt, mutual funds, derivatives or even bitcoins) instead of a single asset with the objective of earning returns is commensurate with the risk profile of the investor.

Direct Investment commonly referred to as foreign direct investment (FDI), refers to an investment in a foreign business enterprise designed to acquire a controlling interest in this enterprise.

7 0
3 years ago
The command-and-control strategy for pollution reduction refers to
Sonbull [250]
The command-and-control strategy for pollution reduction refers to the standards on the methods used to reduce pollution. Command-and-control<span> (CAC) gives regulation sets that specific limits for </span>pollution<span> emissions and it defines methods and solutions how to reduce pollution. </span>
6 0
4 years ago
"i can't believe that it's medicine" is an advertising slogan for a new antacid. the manufacturer claims that their antacid work
Dafna1 [17]
<span>These claims are part of the firm's strategy to achieve product </span>differentiation. When a company has developed product differentiation in the mind of a consumer, that means they stand on in their mind. The consumer can easily distinguish one company's product or service from that of a competitor. Being a "favorite" in the consumers mind keeps the consumer loyal to the brand. 
3 0
3 years ago
Other questions:
  • How did dr. Martin Luther King Jr and Malcolm X differ in their approaches to gain civil rights
    13·1 answer
  • Which one of the following statements is wrong?
    11·1 answer
  • Billion of Dollars
    11·1 answer
  • Which of the following concepts can be illustrated using the production possibilities curve? I. Choice II. Scarcity III. Price l
    9·1 answer
  • Most four year colleges want an applicants scores for all of the following except ?
    13·2 answers
  • __________ refer(s) to the process by which consumers select, organize, and interpret information to form a meaningful picture o
    10·1 answer
  • What is the chance of me being in the U.S. Air Force !!!!
    15·1 answer
  • The ABC Corporation has purchased 50 pieces of a specially designed electronic component at $2,000 per unit. In the $2,000 selli
    12·1 answer
  • Which question is most likely to be illegal in an interview?
    13·2 answers
  • The greatest number of advance pricing agreements have been negotiated with the U.S. Internal Revenue Service (IRS) for which ty
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!