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pochemuha
2 years ago
9

5. Risk analysis in capital budgeting Projects differ in risk, and risk analysis is a critical component of the capital budgetin

g process. Consider the case of United Recycling Inc.: United Recycling Inc. is one of the largest recyclers of glass and paper products in the United States. The company is looking into expanding into the cardboard recycling business. The company’s CFO has performed a detailed analysis of the proposed expansion. The selling price of recycled cardboard can fluctuate dramatically, depending on the market conditions. By creating models that used different assumptions for the selling price of recycled cardboard but keeping all other inputs in the model the same, the CFO demonstrated the effect of fluctuations in the price of recycled cardboard. Based on the information given, determine which of the statements is correct. The company’s CFO was conducting a sensitivity analysis on the project’s financial model. The company’s CFO performed a scenario analysis on the project’s financial model. Evaluating risk is an important part of the capital budgeting process. Which of the following is measured by its effect on the firm’s beta coefficient? Risk-adjusted cost of capital Market, or beta, risk Corporate, or within-firm, risk Stand-alone risk When dealing with , diversification is totally ignored.
Business
1 answer:
stira [4]2 years ago
5 0

Answer:

A. Market, or beta, risk

Explanation:

i.e when the CFO adjusts the cost per ton of processing the cardboard, the project’s NPV will decrease.

Solution 2 :- The correct answer is (B) I.e Corporate or with in firm risk

a project's risk to the corporation as opposed to its investors

Solution 3 :- Stand alone risk

Stand alone risk is measured by the variability of the project's expected returns - diversification is totally ignored

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Answer: b. must decline to take the listing with this requirement

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Which type of adjusting entry is used to record a payment a company has not yet made for a service it received?
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C. Accrued expense

Explanation:

Because the expense has already been incurred, but not yet paid, it is an accrued expense.

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Answer and Explanation:

The Journal entry is shown below:-

Bad debts expense Dr, $2,000

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Prepare the adjusting entry to record bad debts expense assuming uncollectibles are estimated to be (1) 3% of credit sales, (2)
Genrish500 [490]

Answer:

1.

Date                   Account Title                                             Debit          Credit

Dec. 31             Bad debt expense                                    $9,000

                        Allowance for doubtful accounts                                 $9,000

Working

= 3% * 300,000

= $9,000

2.

Date                   Account Title                                             Debit          Credit

Dec. 31             Bad debt expense                                    $12,000

                        Allowance for doubtful accounts                              $12,000

Working

= 1% * total debt

= 1% * (900,000 + 300,000)

= $12,000

3.

Date                   Account Title                                             Debit          Credit

Dec. 31             Bad debt expense                                    $12,500

                        Allowance for doubtful accounts                              $12,500

Working

= 6% * Accounts receivable

= 6% * 125,000

= $7,500

As the Allowance account is in debit, it means that bad debt exceeded the allowance so this balance needs to be added to properly cater for bad debts.

= 7,500 + 5,000

= $12,500

8 0
3 years ago
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