1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
NeX [460]
3 years ago
10

Norris Enterprises, an all-equity firm, has a beta of 2.0. The chief financial officer is evaluating a project with an expected

return of 14%, before any risk adjustment. The risk-free rate is 5%, and the market risk premium is 4%. The project being evaluated is riskier than the firm's average project, in terms of both its beta risk and its total risk. Which of the following statements is CORRECT?
a. Riskier-than-average projects should have their expected returns increased to reflect their higher risk. Clearly, this would make the project acceptable regardless of the amount of the adjustment.
b. The project should definitely be accepted because its expected return (before any risk adjustments) is greater than its required return.
c. The project should definitely be rejected because its expected return (before risk adjustment) is less than its required return.
d. The accept/reject decision depends on the firm's risk-adjustment policy. If Norris' policy is to increase the required return on a riskier-than-average project to 3% over rS, then it should reject the project.
Business
1 answer:
Genrish500 [490]3 years ago
4 0

Answer:

d. The accept/reject decision depends on the firm's risk-adjustment policy. If Norris' policy is to increase the required return on a riskier-than-average project to 3% over rS, then it should reject the project.

Explanation:

The accept/reject decision depends on the firm's risk-adjustment policy. If Norris' policy is to increase the required return on a riskier-than-average project to 3% over rS, then it should reject the project.

You might be interested in
_____ leadership seeks information, opinions, and preferences, sometimes to the point of meeting with the group, leading discuss
never [62]
The democratic style of leadership seeks information, opinions, and preferences, sometimes to the point of meeting with the group, leading discussions, and using consensus <span>or majority vote to make the final choice.</span>
4 0
3 years ago
Why might attending trade shows enable managers to respond to uncertainty within an industry?
almond37 [142]
Trade shows show how business is done, and if you know how it's done, you can use it in your company, and if you are the manager, you can help your industry.
5 0
3 years ago
Anyone has documents about the increasing importance of global production networks in the textile and clothing industry?
svetoff [14.1K]

Answer:

The Global Textile and

Garments Industry:

The Role of Information

and Communication

Technologies (ICTs)

in Exploiting the

Value Chain

Information and Communication

Technology (ICT) has an important role

to play as developing countries adjust

to the new era. These opportunities will

derive from the ability of ICTs to open

up parts of the supply chain (other than

basic manufacturing and processing)

to developing countries. This report

presents case studies of companies that

have successfully used ICTs to move,

for example, into higher-value activities

such as design and logistics, or to

access niche markets

4 0
3 years ago
If a firm has a $1,500,000 debt limit before AT kd will change and if taxes are 40% and total equity in the capital structure is
andrew-mc [135]

Answer:

$2,500,000

Explanation:

Break Point = Level of debt / Weight of debt

(100%-40%)

=60%

Hence:

= 1,500,000 / 60%

= $2,500,000

Therefore the debt breakpoint in the MCC schedule will be $2,500,000

6 0
3 years ago
Lina wants to be a lawyer for her future career. Which extracurricular activity would be the most helpful? teacher’s aide marchi
Aleksandr [31]
I believe your answer would be C. Speech and Debate. Being a lawyer requires lots of debate, and speech to support your answer and make it more clear. 
3 0
4 years ago
Read 2 more answers
Other questions:
  • A marketing research is most likely to serve as a _____ in a new product development team. functional representative process man
    13·1 answer
  • The ____ model of participation sees risks in greater participation and, thus, favors a larger role for elites.
    10·1 answer
  • Mark avoids high-end brands as he considers them expensive. However, during one of his shopping trips, he notices that a luxury
    8·1 answer
  • You are thinking about a project to expand your business. In order to start the project, you have to invest $200,000 in new equi
    8·1 answer
  • This exit strategy allows the entrepreneur an opportunity to buy back venture capital stock at cost and an additional premium. a
    12·1 answer
  • __________________ is a political system in which the government tolerates little or no opposition but permits nongovernmental c
    9·1 answer
  • What is the verb in this sentence grandma served us hot pancakes in the morning
    10·1 answer
  • The first step in creating a budget is to
    8·1 answer
  • GiftBasket has successfully created a higher perceived value in the e-commerce industry, though it offers the same products at s
    14·1 answer
  • Heedy Company is trying to decide how many units of merchandise to produce each month.The company policy is to have 20% of the n
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!