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SCORPION-xisa [38]
3 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:
ozzi3 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

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A company’s retained earnings increased $375,000 last year and its assets increased $973,000. The company declared a $79,000 cas
Alex Ar [27]

Answer:

C. $454,000.

Explanation:

We know that

The ending balance of retained earnings = Opening balance of retained earnings + net income - dividend paid

$375,000 = $0 + net income - $79,000

So, the net income would be

= $375,000 + $79,000

= $454,000

The ending balance of retained earnings - Opening balance of retained earnings is also known as increase in retained earning

6 0
3 years ago
12345678901234567890000
Arlecino [84]

Answer:

12345678901234567890000

Explanation:

6 0
3 years ago
Project 1 requires an original investment of $125,000. The project will yield cash flows of $50,000 per year for 10 years. Proje
mario62 [17]

Answer: $126,613

Explanation:

Net Present value of Project A is:

= Present value of $50,000 annuity + Present value of residual value - Initial investment

Present value of $50,000 annuity:

= 50,000 * ( 1 - ( 1 + rate)^-number of periods) / rate

= 50,000 * ( 1 - ( 1 + 12%) ⁻⁸) / 12%

= $248,382

Present value of residual value:

= 8,000 / ( 1 + 12%)⁸

= $3,231

Net present value

= 248,382 + 3,231 - 125,000

= $126,613

6 0
3 years ago
Harry owes the bank money. To repay his debt, he paid \$150$150dollar sign, 150 back to the bank each month. After 101010 months
Firdavs [7]

Answer: $8,400

Explanation:

Given the following:

Amount repaid each month = $150

Number of Periods for which amount was paid = 10 months

Amount left after 10 months payment = $6900

Harry's original debt=?

The total amount paid = $150 × 10 = $1500

Amount left = $6900

Total debt amount:

(Total Amount left + total amount paid )

$(6900 + 1500)

=$8400

7 0
3 years ago
When a perfectly competitive firm (that sells its good for $20 per unit) hires 1 unit of factor X it produces 70 units of output
Gelneren [198K]

Answer:

d)  $300

Explanation:

<em>Marginal revenue is the extra revenue from a resource the extra revenue earned from the use of additional  unit of a given resource for production purpose. It is calculated as the increase in total revenue as a result of utilizing one additional unit of a factor of production.</em>

Marginal revenue = total revenue from 85 units - total revenue from 70 units

Marginal revenue = ($20 × 85) - ($20× 70)

                           = $300

5 0
3 years ago
Read 2 more answers
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