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
Katyanochek1 [597]
2 years ago
9

Firm M's earnings and stock price tend to move up and down with other firms in the S&P 500, while Firm W's earnings and stoc

k price move counter cyclically with M and other S&P companies. Both M and W estimate their costs of equity using the CAPM, they have identical market values, their standard deviations of returns are identical, and they both finance only with common equity. Which of the following statements is CORRECT?
a. M and W should have identical WACCs because their risks as measured by the standard deviation of returns are identical.
b. M should have the lower WACC because it is like most other companies, and investors like that fact.
c. If M and W merge, then the merged firm MW should have a WACC that is a simple average of M's and W's WACCs.
d. Without additional information, it is impossible to predict what the merged firm's WACC would be if M and W merged.
e. Since M and W move counter cyclically to one another, if they merged, the merged firm's WACC would be less than the simple average of the two firms' WACCs.

please give me why
Business
1 answer:
sweet-ann [11.9K]2 years ago
3 0

Answer:

The answer is letter C.

Explanation:

The correct statement is If M and W merge, then the merged firm MW should have a WACC that is a simple average of M's and W's WACCs.

You might be interested in
What do you understand by forester?​
FromTheMoon [43]
That he will forever stay by the position
6 0
1 year ago
Leona, whose marginal tax rate on ordinary income is 37 percent, owns 100 percent of the stock of Henley Corporation. This year,
riadik2000 [5.3K]

Answer: See explanation

Explanation:

First and foremost, it should be noted that there's a flat tax rate of 21% on the taxable income, therefore the after tax income will be:

= (1 - 21%) × $1 million

= 79% × $1 million

= $790,000

Therefore, the amount of the dividend payment is $790,000 which is given to Leona.

The after tax cash flow from the dividend receipt will be:

= $790,000 - (20% × $790,000)

= $790,000 - (0.2 × $790,000)

= $790,000 - $158,000

= $632,000

Therefore, the total tax by Henly and Leona will then be:

= $210,000 + $158,000

= $368,000.

This is 36.8% (368000/1 million) of the tax rate.

5 0
2 years ago
There is a 3 percent error rate at a specific point in a production process. If an inspector is placed at this point, all the er
xenn [34]

Answer:

Yes the inspector should be hired

Explanation:

Defective average = 0.03

inspection rate = 30 per hour

Cost of inspector = 8 per hour

Correction cost is $10 each

No inspection = 9/30

= 0.300

Inspector = 8/30

= 2.67

Yes the inspector should be hired

5 0
2 years ago
You plan to construct a restaurant on a 20,000 square foot lot
labwork [276]

Answer:

8,000 square foot

Explanation:

Total space available 20,000 square foot.

60 percent  to be used. space left?

If 60% is will be used, only 40% will be availble for construction.

40% of 20,000= 40/100x 20,000

                          =0.4 x 20,000

                          =8,000 square foot

6 0
3 years ago
Prepare journal entries to record the following production activities.
blagie [28]

Answer:

1.Dr Work in progress inventory75,000

Dr Payable Factory payroll 75,000

2. Dr Factory overhead 20,000

Cr Factory Payroll Payable 20,000

3. Dr Factory wages payable 95,000

(75,000+20,000)

Cr Cash 95,000

Explanation:

Preparation to record Journal entry

1. Since the amount of $75,000 was been Incurred of the direct labour production this means we have to record the transaction as :

Dr Work in progress inventory75,000

Dr Payable Factory payroll 75,000

2. Since the amount of $20,000 was Incurred of indirect labor in production this means we have to record the transaction as:

Dr Factory overhead 20,000

Cr Factory Payroll Payable 20,000

3. Since factory payroll was paid the transaction will be recorded as :

Dr Factory wages payable 95,000

(75,000+20,000)

Cr Cash 95,000

5 0
2 years ago
Other questions:
  • Two mutually exclusive alternatives are being considered for the environmental protection equipment at a petroleum refinery. one
    11·1 answer
  • The purpose of this assignment is the creation of a research analysis. every day, consumers make millions of decisions that impa
    10·1 answer
  • You have been called in as a consultant for the purpose of advising what sales volume quotas for Brand A mouth wash should be es
    7·1 answer
  • Shen purchased corporate stock for $20,000 on april 10, 2015. on july 14, 2017, when the stock was worth $12,000, shen died and
    15·1 answer
  • The following information is available for October for Barton Company:Beginning inventory $250,000Net purchases 750,000Net sales
    8·1 answer
  • Hailey, Inc., has sales of $19,650, costs of $9,380, depreciation expense of $2,050, and interest expense of $1,540. Assume the
    10·1 answer
  • Over the course of 40 years, Sal grew his company to six package shipping stores. With his retirement approaching and the increa
    6·2 answers
  • Name the accounts debited and credited for each of the following transactions.
    9·1 answer
  • Provide three examples of how busineses respond to the corona pandemic as part of social responsibility
    7·2 answers
  • Suppose you started a new job recently. While you were completing your employee information forms online, you noticed that you m
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!