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]
2 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]2 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
The price of peanut butter increased by 25% and the quantity of jelly demanded decreased by 50%. Using one decimal place and the
natulia [17]

Answer:

-2

Explanation:

To find the cross price elasticity between to goods, we use this formula:

Cross Price Elasticity of Demand = % change in quantity demanded of good 1 / % change in the price of good 2

Now, we plug the amounts into the formula

Cross Price Elasticity of Demand = -50% / 25%

                                                      = -2

5 0
2 years ago
An advantage of __________ is that they allow real-time merchandising; products and features can be added or removed as needed,
alexgriva [62]

A benefit of digital catalogs is<span> that they allow real-time merchandising. Other advantages </span>are they eliminate the costs of printing and mailing, they offer an almost unlimited merchandise, they offer a wider assortment of presentation formats. The internet and digital marketing have created this to match the need of consumers. 

<span> 
</span><span> </span>

8 0
3 years ago
Goods that are created and used domestically are __________.
dem82 [27]
The answer is C. Produced and consumed in one country. 
Goods that are created and used domestically are not imported goods because imported goods means coming from other country, it's not also exported goods since it is not exported to other county. Rather it is being produced and used of the same country.
7 0
2 years ago
Read 2 more answers
. Find the accumulated present value of a continuous income stream that earns 4.2% interest annually, when $4000 is deposited pe
Mars2501 [29]

Answer:

The accumulated present value is $67,518.99.

Explanation:

Investment opportunities that require a series of payments of a fixed amount for a specific number of periods are known as annuities.

The Present Value of this annuity can be calculated as :

Fv = $0

n = 30

r = 4.2 %

Pmt = - $4,000

P/ yr = 1

Pv = ?

Using a financial calculator, the  Present Value (PV) of the annuity is $67,518.9948 or $67,518.99.

4 0
3 years ago
What are the opportunities of an entrepreneur
slavikrds [6]
Definition: the skill and risk taking ability of the person who brings the other resources or factors of production together to produce a good or service e.g. the owner of a business. These people are called entrepreneurs

Opportunities of an entrepreneur:
• involves the sale or lease of any product, service, equipment that will enable the purchaser-licensee to begin a business.
• invest in (multiple) businesses
•quality content
• foreign markets
•crowdfunding
8 0
3 years ago
Other questions:
  • An applicant for an individual health policy failed to complete the application properly. Before being able to complete the appl
    10·1 answer
  • Finding the interest rate and the number of years The future value and present value equations also help in finding the interest
    7·1 answer
  • Yachts are produced by a perfectly competitive industry in Dystopia. Industry output​ (Q) is currently​ 30,000 yachts per year.
    8·1 answer
  • The following December 31, 2021, fiscal year-end account balance information is available for the Stonebridge Corporation:
    13·1 answer
  • For a variety of reasons, a bank sometimes will hold more reserves than is legally required. These reserves are known as excess
    9·1 answer
  • When cash sales and bankcard sales transactions are recorded in the cash receipts journal, a check mark is placed in the Posting
    7·1 answer
  • Suppose that a 6.250% semi-annual coupon paying bond is priced at 105.500 per 100 of par value. The tenor of the bond is 13 year
    5·1 answer
  • Ivanhoe Company sells office equipment on July 31, 2017, for $22,410 cash. The office equipment originally cost $81,920 and as o
    6·1 answer
  • why do people take surveys and human verification's for?????????????????????????????????????????????????????????????????????????
    11·1 answer
  • When you retire 35 years from now, you want to have $1.25 million. You think you can earn an average of 13.5 percent on your inv
    6·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!