Answer:
a. 9.98%
Explanation:
The computation of required rate of return is shown below:-
Required return= Risk - Free rate + Beta × (Market rate- Risk-free rate)
11.75% = 2.30% + 1.23 × (Market rate - 2.3%)
(11.75% - 2.30%) ÷ 1.23 = Market rate - 2.3%
Market rate = (11.75% - 2.30%) ÷ 1.23 + 2.3%
=9.98%
Therefore for computing the required rate of return on the market we simply applied the above formula.
Answer:
total value of ending WIP inventory: 8,400
Explanation:
unit material cost: 5.00 dollar
ending work in proces inventory
materials equivalent units:
1,500 x 100% = 1,500
as the mateirals are added entire at the beginning of the process:
material cost: 1,500 x 5 = 7,500
conversion
1,500 x 20% = 300
300 x 3.00 = 900
total value of ending WIP inventory:
materials 7,500
conversion 900
total 8,400
Answer:
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Explanation:
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Answer:
E) if the firm evaluates these projects and all other projects at the new overall corporate wacc, it will probably become riskier over time.
Explanation:
Before the merger, Audaco would have rejected any project with an IRR of less than 12% (more risky investments) while Careco only required a 10% IRR (less risky projects). But after the merger the combined WACC will be lower than Audaco's, but higher than Careco's. Therefore, the new merged company will start accepting more risky projects and that tendency will continue over time. Eventually, the company's WACC will have to adjust and increase, and the cycle will continue.
