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mrs_skeptik [129]
3 years ago
6

Piedmont Hotels is an all-equity company. Its stock has a beta of 1.23. The market risk premium is 6.9 percent and the risk-free

rate is 2.7 percent. The company is considering a project that it considers riskier than its current operations so it wants to apply an adjustment of 1.9 percent to the project's discount rate. What should the firm set as the required rate of return for the project
Business
1 answer:
never [62]3 years ago
5 0

Answer:

The required rate of return for the project will be 13.087%

Explanation:

To calculate the required rate of return for the project, we must first calculate the required rate of return for the firm's equity. The required rate of return can be calculated using the CAPM or Capital Asset Pricing Model equation. The formula for required rate of return (r) under this model is,

r = rRf + Beta * rpM

Where,

  • rRF is the risk free rate
  • rpM is the risk premium on market

r = 0.027 + 1.23 * 0.069

r = 0.11187 or 11.187%

The discount rate that is usually used for an all equity firm is its required rate of return. Thus, the required rate of return for the project will be,

r = 0.11187 +  0.019

r = 0.13087 or 13.087%

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Answer:

C(100) = (75 x 100) + (200 x 100) = $27,500

Explanation:

the initial cost function of producing bikes is:

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if the cost of wheels increase to $100 each, then the cost function is:

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in this case, there is not much to calculate since every bicycle must have 1 frame and 2 wheels, that means that in order to produce 100 bicycles you will necessarily need 100 frames and 200 wheels. Labor is not considered in this cost function, so any cost minimization strategy is limited to using the minimum amount of parts:

C(100) = (75 x 100) + (200 x 100) = $27,500

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3 years ago
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Answer: true

Explanation:

8 0
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Copies Plus Print operates a copy business at two different locations. Copies Plus Print has one support department that is resp
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Answer:

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It suggests that the advertisement financially supports the website  ( C )

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