The correct answer is the firm's component cost of debt for purposes of calculating the wacc is 7.32%.
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:
Please refer the complete question:
Which of the following statements is correct?
a. The project should definitely be accepted because its expected return (before any risk adjustments) is greater than its required return.
b. The project should definitely be rejected because its expected return (before risk adjustment) is less than its required return.
c. 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.
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.
e. Capital budgeting projects should be evaluated solely on the basis of their total risk. Thus, insufficient information has been provided to make the accept/reject decision.
Answer: Any combination on the production possibilities frontier that brings the highest level of satisfaction to the people in the economy.
Explanation:
The Production Possibilities Frontier depicts the quantities of two goods that can be produced given that resources are limited and being used to produce the same goods.
Allocative efficiency therefore is any point on this frontier that brings the highest level of satisfaction to the people based on their needs and wants. For instance if people want more clothing than cell phones they should pick any points from B to E.
So long as it is on the PPF, there is Allocative efficiency.
Answer:
Price levels
Explanation:
Price level is an indicator that is obtained by getting the average price of goods that are produced within an economy or an industry.
When prices rise it indicates that demand for a good is on the rise and eventually an inflation may result. When price falls demand has reduced and deflation may result.
In the given scenario price level is the best indicator to show how prices of properties in the area have fluctuated.
It will also give insight into how good a property purchase will be.
Answer:
D) If they acquire another company at an amount higher than the market value of its net assets.
Explanation:
Goodwill is basically the brand name, customer base or any patents. Hence the businesses record goodwill when they are acquiring any business or company which has a high price than its actual net assets, therefore, the extra price which is paid while acquiring is known as goodwill.
Hope this clear things up.
goodluck.
