Answer:
Yes the company should you pursue the project.
Explanation:
This problem requires us to tell whether we should pursue the project or not. The IRR of the project is given in the question and WAAC is required to be calculated. The company should accept the project if IRR (10%) is greater than or equal to company's WAAC.
So let calculate waac first.
WAAC = 80%* 8.5% (100% -21%) + 20% * 11%
= 5.4% + 2.2 %
= 7.6%
based on above mentioned rule the company should pursue the project.
Answer:
The slope of the CML = (13% - 7%)/25% = 0.24
Explanation:
Given that:
expected rate of return of 17%
standard deviation of 27%.
The T-bill rate is 7%.
You estimate that a passive portfolio invested to mimic the S&P 500 stock index yields an expected rate of return of 13% with a standard deviation of 25%.
The slope of the CML is
Slope of the CML = (Expected return of Market - Risk free return)/Standard deviation of market
The slope of the CML = (13% - 7%)/25% = 0.24
= (0.13 - 0.07) /0.25
= 0.24
Answer:
Employees, Customers, Board of Directors, Community, Investors
Explanation: