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]
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

You might be interested in
Rising unemployment levels tend to stifle demand for goods and services, which can have the effect of forcing prices downward is
Yuki888 [10]

Answer:

This is called deflation.

Explanation:

Deflation refers to the situation when there is a decline in the general price level, it causes the economy to slow down. It generally happens because of a reduction in the money supply.  

The nominal costs of goods and services, labor, capital, etc. decline. But the relative prices, generally remain the same. '

The decline in price is not good for everyone and adversely affects producers.  It is also harmful to borrowers. The decline in the price level increases the purchasing power of money.

5 0
2 years ago
The systematic risk principle states that the expected return on a risky asset depends only on the asset’s ___ risk.
Ahat [919]

The systematic risk principle states that the expected return on a risky asset depends only on the asset’s <u>market </u>risk.

<h3>What are systematic risk principles?</h3>

According to the systemic risk concept, the expected return on an asset is solely determined by its systematic risk. As a result, regardless of how much overall risk an asset carries, just the systematic part is significant in estimating the expected return (including risk premium) on such asset.

Market risk is a kind of systematic risk that affects the entire market. Because it cannot be diversified and distributed, the investor is compensated for it.

Learn more about systematic risk principles here:

brainly.com/question/25821437

#SPJ1

Learn more about systematic risk principles here:

5 0
1 year ago
Juanita knits blankets as a hobby and sells them. In the current year, she earns $5,000 from her blanket sales and incurs expens
nirvana33 [79]

Answer:

C) report $5,000 of hobby income and deduct nothing from AGI since Juanita does not itemize deductions.

Explanation:

After the passage of the Tax Cuts and Jobs Act (HR 1, “TCJA”) from the period 2018 to 2025 the hobbies deduction is no longer valid.

Thus Juanita cannot declare any deduction. As hobbies aren't businesses. They aim for fun and entertainment not profit is not entitled to the tax deduction businesses are.

6 0
3 years ago
Two or more organizations that join forces in order to achieve advantages that neither can perform as well alone are known as __
SpyIntel [72]

Answer:

correct answer is Strategic allies

Explanation:

Strategic allies is a arrangement between 2 or more than 2 organization for undertaking mutual beneficial projects even both retain their independence.

as they have less complex than a joint venture  

and for improving their product and development competitor in the market , they can enter into a strategic alliance

so as that both organizations can work on common coal with benefit

so correct answer is Strategic allies  

5 0
3 years ago
In what sense is test marketing a special type of experiment? What are its main objectives?
s344n2d4d5 [400]
The objective of test marketing is to find the limitations and strengths of the product based on customers' reactions. It also helps us to structure the marketing strategy of that product. A test marketing campaign aims to predict the revenue model (sales, profit, pricing).
5 0
1 year ago
Other questions:
  • A retired woman has $180,000 to invest. she has chosen one relatively safe investment fund that has an annual yield of 9% and an
    11·1 answer
  • alex has to pay his car insurance twice a year. each payment is $312. how much money should alex budget for his insurance each m
    12·1 answer
  • For each of the following scenarios, classify the type of spending (C,I,G,Xn), describe its impact on gross domestic product (in
    14·1 answer
  • Among United States' major trade partners in 2014, a trade ______ occurred only with _____. The United States also had the large
    7·1 answer
  • Suppose that disposable income, consumption, and saving in some country are $800 billion, $700 billion, and $100 billion, respec
    5·1 answer
  • Jetta production cost in 2002 and 2003 was 12,000 Euro per Jetta. Jettas were sold in US at $13,000 in 2002 and 2003. Forward he
    14·1 answer
  • Current news and politics is full of concern about the environment, particularly as it is related to oil use and the auto indust
    13·1 answer
  • December 31, Year 1, the Loudoun Corporation estimated that 3% of its credit sales of $112,500 would be uncollectible. Loudoun u
    14·1 answer
  • Presented below is information related to Shamrock Corp., which sells merchandise with terms 2/10, net 60. Shamrock Corp. record
    7·1 answer
  • Sarah exchanges a building and land (used in her business) for Tyler's land and building and some equipment (used in his busines
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!