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
Olenka [21]
3 years ago
12

Suppose that two firms, A and B, are considering the same project. The project is in the same risk class as firm A's overall ope

rations. The project has an IRR of 13.0 percent. Firm A has a beta of 1.2, while firm B's beta is 0.9. The risk-free rate is 4.5 percent and the market risk premium is 7.0 percent. Which firm(s) should accept the project?A) firm A onlyB) firm B onlyC) both firms A and BD) neither firm A nor BE) The answer cannot be determined without more information.
Business
1 answer:
mario62 [17]3 years ago
5 0

Answer:

Firm A should accept the project beacause it has high required rate of return which means low risk involved.

Explanation:

Rate of return = risk free return + Beta ( market risk premium)

Firm A

rate of return = 0.045 + 1.2 (0.07)

= 0.045 + 0.084

= 12.9%

Firm B ;

 rate of return = 0.045 + 0.9(0.07)

= 0.045 + 0.063

= 10.8%

You might be interested in
As the U.S. dollar appreciates, the U.S. ____________ curve shifts _____________ resulting in a(n) _________________ in the U.S.
Maslowich

Answer: a. AD; leftward; decrease; decrease.

Explanation:

If the dollar appreciates (the exchange rate increases), the relative price of domestic goods and services increases while the relative price of foreign goods and services falls. Also, the change in relative prices will decrease U.S. exports and increase its imports.

Aggregate demand shift leftward.

8 0
3 years ago
Lila and Jillian both own small businesses in the town where they live. The women are friends and often get together to discuss
dsp73

The differences between Lila and Jillian's businesses are based on what they offer to the public, since one offers products and the other offers services, which makes their businesses different.

<h3>What is a product-based business?</h3>

A product-based business is a type of business in which the main purpose is to offer a specific product to the public, for example:

  • Beauty products.
  • Sport products.
  • School products.
  • Construction products.

<h3>What is a service-based business?</h3>

A service-based business is a type of business in which the main purpose is to offer a specific service to the public, for example:

  • Satellite television service.
  • Legal advice service.
  • Sports training service.
  • Nutrition service.

Based on the above, it can be inferred that the discussions between Lila and Jillian can include very varied topics because their businesses are different because they involve different value chains.

Learn more about business in: brainly.com/question/15826604

#SPJ1

3 0
1 year ago
All of the following statements regarding accounting treatments for liabilities under U.S. GAAP and IFRS are true except:_______
mihalych1998 [28]

Answer:

A) Accounting for bonds and notes under US GAAP and IFRS is similar.

Explanation:

US GAAP and IFRS do not have the same accounting guideline for bond issue cost:

Under US GAAP, bonds payable is recorded at face value while premiums or discounts are recorded separately. While under IFRS, bonds payable is recorded using the carrying value, and amortization or premiums or discounts is done by using the effective-interest method.

5 0
2 years ago
Under variable costing, if a manager's bonus is tied to operating income, then increasing inventory levels compared to last year
inysia [295]

Answer: not affecting the manager's bonus

Explanation:

Under Variable costing, fixed manufacturing overhead is not charged on inventories produced or not sold for the year which means that regardless of inventory level, the relevant inventory here when it comes to calculating operating profit is the one that was sold.

The manager's bonus will therefore not change as a result of higher inventory levels. Were this absorption costing where fixed overhead was charged to inventory that was not sold, the manager's bonus would increase because the higher inventory level would absorb more of the cost.

7 0
2 years ago
Which of the following is a a form of ownership in which each owner of stock in a cooperative apartment building or housing corp
Maslowich

Answer: Cooperative Ownership

Explanation: In a cooperative ownership, the buyer receives shares of stock in the building corporation and a lease or assignment of the seller's lease of the apartment being sold.A cooperative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise.Buying a house or renting an apartment aren't the only living arrangements available in the marketplace. Housing cooperatives, colloquially known as co-ops, provide an alternative to the traditional methods of acquiring a primary residence.

5 0
3 years ago
Other questions:
  • When an organization has a strong talent pool available from which it can draw employees, the organization is positively influen
    15·1 answer
  • What would be the cash balance in the general ledger if a credit of $2,000 is posted to the cash account that had a beginning ba
    13·1 answer
  • Percy is a rich boy whose parents supply him with every conceivable necessity of life. While still a minor, Percy buys a coat on
    5·2 answers
  • What does usability effectiveness mis metrics measure?
    11·1 answer
  • Suppose the price you are willing to pay for a new car is greater than the marginal cost of producing that new car. Under which
    6·1 answer
  • The standard price and quantity of direct materials are separated because
    7·1 answer
  • People who might need to retrieve part or all of their investment relatively soon, such as the elderly, are often advised to inv
    10·2 answers
  • A contract in which an owner provides a user the right to use an asset in return for periodic cash payments over a period of tim
    6·1 answer
  • O'brien inc. has the following data: rrf = 5.00%; rpm = 6.00%; and b =+0.70. what is the firm's cost of equity from retained ear
    6·1 answer
  • he concept of ______ is probably the best single measure of an industry's impact.A. total outputB. total spendingC. aggregate ma
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!