Answer:
The rate of return expected on this project by Cold Goose Metal Works Inc. is 15.20%
Explanation:
Since flotation cost is 4% that implies that $500,000 is actually 96% (100%-4%) of the cash proceeds from the capital funding,hence funds raised is computed thus:
funds raised=$500,000/0.96=$520,833.33
Annual return on investment=cash inflow-initial cash outflow
cash inflow is $600,000
cash outflow is $520,833.33
annual return on investment=$600,000-$520,833.33=$79166.67
rate of return on project=annual return on investment/initial investment
=$79,166.67
/$520,833.33*100=15.20%
The rate of return that Cold Goose Metal Works Inc is 15.20%
Answer:
The correct answer is D.
Explanation:
The fed buys $100 worth of bonds from a primary dealer. The fed will pay the dealer for these bonds. This will cause an increase in the total reserves by $100. The money supply will increase by more than $100. The extent of increase in the money supply depends on the required reserve ratio. This is an example of an expansionary monetary policy.
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