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
Y_Kistochka [10]
3 years ago
8

Suppose that you are the CFO of ABC Inc., which is an all-equity firm whose beta is 0.5. You are considering a new project that

is in the same line of business as ABC Inc.’s existing projects. Assume that the CAPM holds. The risk-free rate is 2% and the market risk premium 6%. What is the discount rate for this new project?
Business
1 answer:
neonofarm [45]3 years ago
5 0

Answer:

The discount rate for this project is 5%.

Explanation:

The discount rate for the new project will be the required rate of return or the cost of equity that will be used to discount the cash flows from the project to calculate its Net present value. Using the CAPM, we can calculate the required rate of return (r) as:

r = rRF + beta * rpM

Where,

  • rRF is the risk free rate
  • beta is the stock's beta or measure of risk
  • rpM is the market risk premium

r = 2% + 0.5 * 6% = 0.05 or 5%

You might be interested in
If you see a large group of stranded passengers standing next to a disabled bus, and you have only three seats in your car, deci
Elan Coil [88]

Answer:

c) scarcity

Explanation:

Scarcity is a state in which resources are relatively less then the requirement, and thus an individual aims to best utilize those limited resources.

In the given instance,

There is a large group of stranded passengers, who are standing next to a disabled bus, seats available are only three.

Since there is limited number of seats with relatively high demand the problem here is of about an issue relating to

c) scarcity

8 0
3 years ago
Glenda, the plant manager for ABC Corporation, views the results from the latest survey of employee attitudes. The results show
Brrunno [24]

Answer:

Human resource problem

Explanation:

Human resources is defined as the people that make up the workforce of a business entity. It is also termed manpower, labour, and personel that make up the employee base of a company.

Considerations of human resources are welfare, benefits, hiring, training, and records. These activities have to be satisfactory to maintain a productive workforce.

In the given scenario Glenda views the results of job satisfaction in the manufacturing plant and notices it has dropped significantly since the last survey.

This is a sign that there is a problem related to the human resources of the company.

Job satisfaction will need to be improved to increase employee productivity

6 0
3 years ago
You are the HR manager for a fifty-person firm that specializes in the development and marketing of plastics technologies. When
Natalija [7]
I would say that the organization needs a job and yea yea
4 0
3 years ago
1. Why might a company claim that the total cost of employing a person is $15.30 per hour
gavmur [86]
Companies often do work on a cost-reimbursement basis. That is, Company B reimburses Company A for the cost of doing work for Company B. Suppose your company has a contract that calls for reimbursement of direct materials and direct labor, but not overhead. Following are costs that various organizations incur; they fall into three categories: direct materials (DM), direct labor (DL), or overhead (OH). Classify each of these items as direct materials, direct labor, or overhead.
6 0
3 years ago
Excess cash is cash that is excess to the operations of a company and is considered "negative debt" because the cash could be us
Harrizon [31]

Answer:

True

Explanation:

Excess cash is a term used in the for the residual cash flow of operation. It is calculated after adding the non cash expenses in the net income of the company and deducting all the capital expenditures. This is the cash balance which is available for the reinvestment purpose and for distribution to the stockholders. This cash can also be used to reduce the gearing of the company and there is a cost attached to it if used for payment of loan, which is the rate or return from the reinvestment of these cash flows.

6 0
3 years ago
Read 2 more answers
Other questions:
  • Being able to calculate a healthy margin analysis will help the research & development department understand how to change t
    9·1 answer
  • A high-definition tv costs a company $3,300 to manufacture. if it sells for $6,732, what is the percent markup based on cost? (r
    15·1 answer
  • Which of these is a disadvantage of banking with national retail banks? they have small atm networks. they charge fees for many
    5·2 answers
  • When you're evaluating the risk of starting a new business, which risk is likely to be worth it? Question 17 options: Losing you
    13·1 answer
  • This is a piece of information that is used to support a main idea. definition
    14·2 answers
  • Savers make deposits and investments in order to earn what?
    12·1 answer
  • John paid $60,000 to replace the roof on a warehouse he used in his business. In addition, he spent $12,500 to demolish and remo
    15·2 answers
  • Cartels in the United States are a. legal if price is competitively determined. b. legal if all firms in the industry agree to t
    5·1 answer
  • If the fed sells $5 billion of u. S. Bonds in the open market and the reserve requirement is 5 percent, m1 will eventually:.
    15·1 answer
  • can be useful in analyzing how a choice affects a particular market and shapes the economic system as a whole.
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!