Answer:
The multiple choices are as follows:
18.6%
14.0%
22.8%
25.0%
The second option is the correct answer,14%
Explanation:
The capital asset pricing asset model formula for computing a firm's cost of equity according to Miller and Modgiliani is given below:
Ke=Rf+Beta*(Mr-Rf)
Rf is the risk free of 2% which is the return expected from zero risk investment such as government treasury bills.
Beta is how risky an investment in a company is compared to similar businesses operating in similar business sector of the company given as 2.0
Mr is the expected return on market portfolio which 8%
Ke=2%+2*(8%-2%)
Ke=2%+2*(6%)
Ke=2%+12%=14%
Answer:
Present Value 5,715,331.32
We are going to accept the project only if the initial investment is at 5,715,331 or below in order to achieve the return to support the cost of capital structure of the company
Accepting a project with a higher cost will not generate enought cashflow to sustain the patyment of debt and the return expected from the stockholders therefore, will generate a economic result and investor will leave the company for other which can sustain their desired return.
Explanation:
We are going to discount the yearly cash-flow at the given rate of 12.50%
then, the terminal value which is the present value of the future period will also be discounted at this rate.
The sum of all this will be the present value of the firm.
![\left[\begin{array}{ccc}$Year&$Cash Flow&$Discounted\\1&575000&511111.11\\2&625000&493827.16\\3&650000&456515.77\\4&725000&452613.93\\5&850000&471689.61\\$terminal&6000000&3329573.74\\Present&Value&5715331.32\\\end{array}\right]](https://tex.z-dn.net/?f=%5Cleft%5B%5Cbegin%7Barray%7D%7Bccc%7D%24Year%26%24Cash%20Flow%26%24Discounted%5C%5C1%26575000%26511111.11%5C%5C2%26625000%26493827.16%5C%5C3%26650000%26456515.77%5C%5C4%26725000%26452613.93%5C%5C5%26850000%26471689.61%5C%5C%24terminal%266000000%263329573.74%5C%5CPresent%26Value%265715331.32%5C%5C%5Cend%7Barray%7D%5Cright%5D)
The formula we use the present value of a lump sum:
We are going to accept the project only if the initial investment is at 5,715,331 or below in order to achieve the return to support the cost of capital estructure of the company
Answer:
$28.57
Explanation:
Dividend growth model can only be used in a situation where the firm pays a dividend which can tend to grow at constant rates reason been that the stock has been influenced by the growth rates which is involved in the dividends which means the firm can increase the dividends.
Therefore the Dividend that is to be paid next year will be:
$2Growth rates
5 %Rates of return
12% Return on Investment
Formular for the calculation of current price of the stock = D1/(r-g)
Where:
D1=2%
r=12%
g=6%
Hence:
2/ (0.12-0.05)= $ 33.33
=2/0.07
=$28.57
Therefore the amount I should be prepared to pay for the stock today will be $28.57
For a 13-person team, The number of extra workers that should be hired to meet the labor hours needed without overtime is 7.
<h3>What is Labor hours?</h3>
This is a term that connote the total hours of workers that are said to be having or getting an hourly wage and they are the ones who are said to be directly employed on the site of a building, public works project, etc.
Note that "Labor hours" is one that entails hours of work that has been carried out by workers who have been employed by the general contractor or the subcontractors that are found to be working on the project.
Learn more about labor hours from
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