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2 years ago

Based on M&M Proposition 2 with taxes, the weighted average cost of capital:

Business

1 answer:

balu736 [363]2 years ago

7 0

Answer:

The correct answer is D

Explanation:

The M and M proposition 2 states the cost of equity of the company. The rate of return required or needed which is grounded or based on the risk level linked or associated with the investment the historical volatility.

The M and M proposition 2 states with the taxes, the weighted average cost of capital decreased or reduced as the ratio of debt to equity increases.

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A project initially costs $40,500 and will not produce any cash flows for the first 2 years. Starting in Year 3, it will produce

melisa1 [442]

Answer:

Net present value = $2063.1922

Explanation:

given data

initially costs = $40,500

cash flows = $34,500

final cash inflow = $12,000

required rate of return = 18.5 percent

solution

The cash flows is

Year 0 = $40500

Year 1 = $0

Year 2 = $0

Year 3 = $34500

Year 4 = $34500

Year 5 = $0

Year 6 = $12000

so Net present value will be express as

Net present value = -Initial cash outflow + Present value of future cash flows ...............1

Present value of future cash flows = (cash flow in year n) ÷ (1 + required rate of return)^t ..........................2

put here value we get

Present value = $\frac{0}{(1+0.185)^1} + \frac{0}{(1+0.185)^2} + \frac{34500}{(1+0.185)^3} + \frac{34500}{(1+0.185)^4} + \frac{0}{(1+0.185)^5} + \frac{12000}{(1+0.185)^6}$

Present value = $42563.1922

Net present value= -$40500 + $42563.1922

Net present value = $2063.1922

8 0

3 years ago

JDS Foods’ projected benefit obligation, accumulated benefit obligation, and plan assets were $65 million, $55 million, and $37

Kitty [74]

Answer:

a) $28 Million

b) -$24 Million

Explanation:

The first part of the question is to determine the pension liability tht should be reported in the balance sheet

To do this, we use the following formula

Projected Benefit Obligation - The Plan Assets

= $65 million - $37 Million = $28 Million

Part B) This part says to dettermine the amount JDS would report if the planned asset increase to $89 million

The formula Projected Benefit Obligation - The Plan Assets still should be used but there is a difference as follows

$65 million - $89 Million = -$24 Million

6 0

3 years ago

When using the Euromarkets, companies ____.?

STALIN [3.7K]

When using the Euromarkets, companies pay less for the loans

8 0

2 years ago

What is the effect on total assets and stockholders' equity of paying the telephone bill as soon as it is received each month?

Archy [21]

Answer:

Option C) Decrease in Total Assets , and No Effect on Equity

Explanation:

Telephone bill it's a Current Liability , if you decide to pay it as soon as you receive it you have to use Cash which is part of your Current Asset, so the impact it's a decreased in your Current Assets through the Cash component.

This movement has no impact in the Sotckholder Equity.

6 0

3 years ago

Disney gets its cast members to go out of their way to make people happy by valuing its employees like internal customers, which

Zigmanuir [339]

<span>The process Disney uses as getting their employees to go out of their way to make people happy by means of valuing employees as if they were internal customers is called internal marketing. Internal marketing is a process that can only happen within a company or organization. The base idea of it is to align the employees with the business through motivation and through empowerment of employees at all levels to push them to deliver rewarding experiences to customers.</span>

5 0

3 years ago