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I am Lyosha [343]
3 years ago
15

Kurt, who is a divisional manager, continually brags that his division’s required return for its projects is 1 percent lower tha

n the return required for any other division of the firm. Which one of the following most likely contributes the most to the lower rate requirement for Kurt’s division?
A.Kurt tends to overestimate the projected cash inflows on his projects.
B.Kurt tends to underestimate the variable costs of his projects.
C.Kurt has the most efficiently managed division.
D.Kurt’s division is less risky than the other divisions.
E.Kurt’s projects are generally financed with debt while the other divisions’ projects are financed with equity.
Business
1 answer:
Viefleur [7K]3 years ago
3 0

Answer:

D. Kurt’s division is less risky than the other divisions.

Explanation:

Based on the information provided within the question it can be said that the most likely reason is that Kurt’s division is less risky than the other divisions. Just as the saying goes "the greater the risk, the greater the reward", the same goes for the opposite, the lower the risk that a division has to undertake the lower the percent for the required return.

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At the present time, Perpetualcold Refrigeration Company (PRC) has 10-year noncallable bonds with a face value of $1,000 that ar
Assoli18 [71]

Answer:

The correct answer is 4.33%(approx)

Explanation:

According to the scenario, the given data are as follows:\

Face value = $1,000

Market price = $1,278.41

Coupon Rate = 11%

So Coupon Payment = $110

Years to maturity = 10 years

So, we can calculate the after tax cost of debt by using following method:

After Tax Cost of Debt = YTM × ( 1 - Rate of Tax)

Where, YTM = \frac{C + \frac{F - P}{T} }{\frac{F + P}{2} }

So, by putting the following value, we get

YTM = 0.0721

So by putting the value in formula, we get

After Tax Cost of Debt = 0.0721 × ( 1 - 0.4)

= 4.33% (approx)

6 0
3 years ago
Mr. Bailey would like to gift $515,000 (FMV) of appreciated property (basis $200,000) to his son. Mr. Bailey doesn't want to use
Oliga [24]

Answer:

He should set a grantor retained annuity trust (GRAT).

Explanation:

Mr. Bailey would be the grantor that transfers the asset into the GRAT, but retains the right to receive annuity payments for a number of years. The IRS has set a minimum annuity corresponding to the Section 7520 rate, during the last two years the rate has varied from 2-3%. When the trust expires (pays all the annuities), the beneficiary gets the asset tax free.

Since the grantor is giving up an asset but in exchange is receiving an annuity form it, there is no applicable gift tax, it is called a zeroed-out GRAT.

This type of grant makes sense only if the grantor believes that the future value of the asset will be higher than the current value, since the annuity is based on the current value. In this case, Mr. Bailey would receive payments based on a $200,000 value, but the property's fair market value is already higher and should increase as time passes.

7 0
2 years ago
Identifying and appraising a company’s resource strengths and weaknesses and its external opportunities and threats is called: S
iren2701 [21]

Answer:

The correct answer is b. SWOT analysis.

Explanation:

SWOT analysis is a self-examination to determine the real strengths and weaknesses in order to establish the correct way to direct the operations of a company for the benefit of all. It is a way of visualizing the internal and external factors that affect business management, in order to propose solutions that allow an improvement in operations over time.

4 0
3 years ago
Choose the statement that is incorrect.
MAVERICK [17]

Answer:

B. In the long​ run, a change in the nominal exchange rate brings an equivalent change in the real exchange rate.

Explanation:

As we know that in the short run there is a decline in the nominal exchange that results in a decrease of real exchange rate due to which there is a reduction of the import and the export is risen.

But in the case of the long run, if there is a change in the nominal exchange rate so the real exchange rate would remain the same

This results that if there is a change in the nominal exchange rate so it would not bring the equal change in the real exchange rate

Hence, option B is incorrect

5 0
3 years ago
(Zaxbys)
OLga [1]

Answer:

Fried Caesar, grilled Caesar, Buffalo blue, fried cobb

Explanation:

Salads are made with various vegetables and meat base. The regular salad is green salad which is most commonly used. There are many benefits of having salad with meal. Many people do not like vegetables so they add little meat with salad to consume it. Most regular salad base are fried Caesar and fried cobb.

5 0
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