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Ainat [17]
3 years ago
12

Wilson’s is reviewing a project with an internal rate of return of 13.09 percent and a beta of 1.42. The market risk premium is

8.1 percent, the tax rate is 35 percent, and the risk-free rate is 2.9 percent. The firm's WACC is 12.68 percent. Will the project be accepted if the WACC is used as the discount rate for the project? Should the project be accepted according to the CAPM, and why or why not?
Business
1 answer:
maria [59]3 years ago
5 0

Answer:

Accepted and rejected

Explanation:

Since the internal rate of return is 13.09% and the WACC is 12.68%

As we can see that the internal rate of return is higher than the WACC as WACC is considered as the discount rate

So the project should be accepted

And, if CAPM is used

So, the expected rate of return is

If CAPM is used

Risk-free rate of return + Beta × market risk premium

= 2.9% + 1.42 × 8.1%

= 2.9% + 11.502%

= 14.40%

And, The Internal rate of return  = 13.09%

Since the internal rate of return is less than the expected rate of return therefore the project should be rejected

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Government's role is to create and enforce laws that:
vazorg [7]

Answer:

Balance the relationship between business and society.

Explanation:

Government regulates both society and business.

The government regulates businesses to ensure that the activities of businesses are in the best interest of the society. This is why they regulate monopolies, tax companies that create negative externalities and subsidise the activities of companies that provide positive externality.

Government also has to look out for businesses by ensuring that the amenities and facilities needed for smooth running of business activities are in place. This is why a government may regulate import activities through quotas or tariffs.

I hope my answer helps you.

5 0
3 years ago
Electrix Inc. is an electrical appliances manufacturing company. It distributes shares of stock to its employees by placing the
Leni [432]

Answer:

<em>Employee stock ownership  plan</em>

Explanation:

An employee stock ownership plan (ESOP) is <em>a retirement plan wherein the employer contributes its shares (or funds to purchase its stock) to the fund for the advantage of the employees of the company.</em>

The company maintains an account for every employee who participates in the program.

Over time stock shares accumulate before an employee is eligible to them.

With an ESOP, while still working with the company, you never purchase or keep the stock directly.

If an employee is fired, decides to retire, is disabled, or dies, the company must transfer the stock shares in the account of the employee.

4 0
3 years ago
Tracy Company, a manufacturer of air conditioners, sold 200 units to Thomas Company on November 17, 2021. The units have a list
svetoff [14.1K]

Answer:

1. November 17

Accounts receivable 77,000

Sales revenue 77,000

November 26

Dr Cash 74,690

Dr Sales Discounts 2,310

Cr Accounts receivable 77,000

2. November 17

Dr Accounts receivable 77,000

Cr Sales revenue 77,000

December 15

Dr Cash 77,000

Cr Accounts receivable 77,000

Explanation:

1. Preparation of the journal entries to record the sale on November 17 and collection on November 26, 2021

November 17

Accounts receivable 77,000

Sales revenue 77,000

[Price = 200 units * $550 *(100%-30%) = 77,000]

November 26

Dr Cash 74,690

(77,000-2,310)

Dr Sales Discounts 2,310

(77,000*3%)

Cr Accounts receivable 77,000

2.Preparation of the journal entries to record the sale on November 17 and collection on December 15, 2021,

November 17

Dr Accounts receivable 77,000

Cr Sales revenue 77,000

[Price = 200 units * $550 *(100%-30%) = 77,000]

December 15

Dr Cash 77,000

Cr Accounts receivable 77,000

4 0
3 years ago
Daniel is a baker who has decided to create his own brand of chain restaurants, Short and Sweet. He negotiates with three suppli
Harman [31]

Answer:

C) The invisible hand

Explanation:

Daniel here seeking to produce and increase his welfare is "led by an invisible hand" to negotiate with his suppliers and to sell goods to his neighbors in a way that everybody is better off as a result from these transactions.

This is also a clear example to what Adam Smith was referring to the invisible hand:

"in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was not part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. " Adam Smith, The Wealth of Nations, Book 4, Chapter 2

8 0
3 years ago
Suppose that the government imposes a​ $2 a cup tax on coffee. The rise in the price of a Starbucks coffee will be​ ______, coff
Scrat [10]

Answer:

increase, decrease

Explanation:

In simple words, when the tax was imposed on the product the company will ultimately bear it to the final consumer which means the price will rise. However when the price of the product rises the demand for that product decreases due to the fact that many individuals would not be able to buy it now from their limited income, this phenomenon is called price elasticity due to income.

5 0
3 years ago
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