Answer:
C) lack of venture capital for innovative products.
Explanation:
Embryonic industries are such industries that are at the beginning stage in their life-cycle. More specifically, newly established ventures are called the embryonic industry or firm.
Options A, B, D, and E all are wrong because a new firm may not produce high qualified first products. It may not have the right complementary products, the production cost may be higher than expected, and finally, there are a few distribution points. Those lead to the slow growth of the embryonic industry.
Option C is the answer because venture capitalists like to invest in innovative products, so there should not be a lack of capital.
Typically homes increase in value over time and cars <span>depreciate</span> over time.
Answer:
At a discount rate of zero percent this investment has a net present value of 6000, but at the relevant discount rate of 17 percent the project's net present value is -5739.
Explanation:
See document attached. To get the net present value, we make a cash-flow in excel.
At moment the investment is =$-36,000
Moment 1 and 2 = $12,000 /moment 3 =$18000
We calculate the Net cash flow (that is the difference between benefits and cost).
To get net present value, we use VNA formula.
=VNA(required rate of return; Net cash flow from moment 0 to moment 3 )+Net cash flow at moment 0
Situation 1
Interest rate 0%
Net Present Value (NPV) 6000
Situation 2
Interest rate 17%
Net Present Value (NPV) -5739
<span>I'd like to answer this, but I don't understand the stock market. Pretty much Greek to me. But I would think stocks would depend on buyers and sellers and how well a company is doing. If people believe in the future, they will be buying. If the future looks grim, many will be selling. Both greatly effect the health of the market.</span>
Answer:
a.To implement the corporate valuation model, we discount projected free cash flows at the weighted average cost of capital.
Explanation:
Common sense requires that like should be compared like, the free cash flows are meant for all providers of finance, debt, and equity stockholders alike, hence, in discounting the free cash flows to firm, the discount rate is the one that captures the overall cost of finance to the firm which is the weighted average cost of capital, hence, option "a" is correct.
Net income and NOPAT cannot be discounted since they are not cash flows
In the same vein,the free cash flows which are meant for debtholders and stockholders cannot be discounted at the cost of equity which is only an equity required rate of return
