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tia_tia [17]
3 years ago
5

Edinburgh Exports has two divisions, L and H. Division L is the company’s low-risk division and would have a weighted average co

st of capital of 8% if it was operated as an independent company. Division H is the company’s high-risk division and would have a weighted average cost of capital of 14% if it was operated as an independent company. Because the two divisions are the same size, the company has a composite weighted average cost of capital of 11%. Division H is considering a project with an expected return of 12%.
Should Edinburgh Co. accept or reject the prject?
A. Accept
B. Reject
On what grounds do you base your accept-reject decision?
A. Division H's project should be accepted, because its return is greater than the risk-based cost of capital for the divison.
B. Division H's project should be rejected, because its return is less than the risk-based cost of capital for the division.
Business
1 answer:
Gnoma [55]3 years ago
4 0

Answer:

Part 1. B Reject

Part 2.  Division H's project should be rejected, because its return is less than the risk-based cost of capital for the division.

Explanation:

Division H's project should be rejected, because its return is less than the risk-based cost of capital for the division.

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Answer:

Correct answer is C. $ dollars.

Calculation:

Rate of Retun PU = (21%*605,000)/58,700 = 2.16

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By adding all above mentioned per unit cost we get 15 dollars aprox

so

Correct answer is 15 dollar.

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Mariana [72]

Answer:

<u>True</u>

<u>Explanation:</u>

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Also, we need to bear in mind that Operations management activities are done in any business in other to efficiently (profitably) process raw materials,  labor, etc into the goods and services needed by consumers.

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Answer:

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