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o-na [289]
3 years ago
6

Consider a project with free cash flows in one year of $90,000 in a weak economy or $117,000 in a strong economy, with each outc

ome being equally likely. The initial investment required for the project is $80,000, and the project's cost of capital is 15%. The risk-free interest rate is 5%.Suppose that to raise the funds for the initial investment, the project is sold to investors as an all-equity firm. The equity holders will receive the cash flows of the project in one year. The market value of the unlevered equity for this project is closest to:A) $94,100B) $90,000C) $86,250D) $98,600
Business
1 answer:
lozanna [386]3 years ago
5 0

Answer:

B) $90,000

Explanation:

The market value of the unlevered equity can be calculated using the following formula:

Expected value = Σpx

Where:

p = the probability of each outcome =50% in this case for both weak and strong economy.

x = the present value of cash flow for each outcome which is $90,000 in case of weak economy and $117,000 in case of strong economy.

Expected value= 0.50(90,000(1+15%)^-1)+0.50(117,000(1+15%)^-1)

                         =0.50(78,260.87)+0.50(101,739.13)

                         =$90,000

So the answer is B) $90,000

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how do I keep my little sister out of my room?? like for real, she's so fuqing annoying. coming in my room a 3am for no reason,
Cerrena [4.2K]

Answer:

to be honest this is a real problem all over the world but with my experience threaten her with something she would get in trouble for with your parents and start bothering her a bunch and going into her room for no reason

5 0
2 years ago
Monthly production costs in Pesavento Company for two levels of production are as follows:Cost .............................2,00
larisa [96]

Answer:

Variable Costs : Supervisory $5,000

Fixed Costs : Salaries $5,000

Mixed Cost : Maintenance $4,000

Explanation:

Variable Costs

These costs vary in direct proportion with the amount of production.

Examples : Materials and Labor

Fixed Costs

Theses costs do not vary with amount of production but stays the same in the relevant range.

Examples : Salaries of Mangers

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5 0
3 years ago
A weaker dollar benefits_______and hurts______.
oksian1 [2.3K]

Answer:

C. American businesses; American consumers.

Explanation:

Currently so many businesses of America are overseas, approximately 40%.

Now when the dollar turns weak these businesses are benefited in a manner that is the buyers needs to pay more for such deals.

Further with this as the buyers needs to pay more, even in the country the imported goods turns expensive as dollars decrease their value.

Accordingly, it is the american business man who gets benefited with weaker dollar, and the american consumer has to pay more for this.

4 0
3 years ago
What criteria must your employer-provided PPE meet?
galben [10]

The employee PPE meet must contain the adequate equipment that the equipment is adequate to protect the work place and the workers from the hazardous accidents

Explanation:

There are many PPE standards and all must ensure that the PPE meet their standards and they provide face protection and the eye protection and the other additional protection

The need to check the standard is completely voluntary and they must make clear that they are under the safety conditions and there are some items that the must pay for is for their boots and shoes the safety glasses and the safety googles

8 0
3 years ago
Waterway Industries buys a delivery van with a list price of $60000. The dealer grants a 13% reduction in list price and an addi
krek1111 [17]

Answer:

Cost of the VAN <em>$53.298‬</em>

Explanation:

We have to enter the van as the cost for a cash purchase and all other neccesary cost to get the van ready for use and in company's possesion.

The financing cost (interest) should be excluded as are not part of the cost the company can chose to take them or not.

list x reduction = invoice

invoice  less discount = cash price

60,000 x (1 - 0.13) x (1 - 0.01) = 51.678‬

to this, we add up the sales tax and the extra cost for the device

51,678 + 860 + 760 = <em>53.298‬</em>

5 0
3 years ago
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