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ser-zykov [4K]
3 years ago
15

Vanguard has an overall (composite) WACC of 10%, which reflects the cost of capital for its average asset. Its assets vary widel

y in risk, and Vanguard evaluates low-risk projects with a WACC of 8%, average-risk projects at 10%, and high-risk projects at 12%. The company is considering the following projects:Col1 Project A B C DCol2 Risk High Average High Low Col3 Expected Return 15% 12% 11% 9%Which set of projects would maximize shareholder wealth?
Business
1 answer:
Svetradugi [14.3K]3 years ago
8 0

Answer:

The projects which maximize Vanguard's shareholder wealth are Project A; Project B; Project D.

Explanation:

Projects which maximize the shareholder value are projects delivering Expected Returns which are higher than its risk-adjusted weighted average cost of capital (WACC).

As a result, Project A with Expected return of 15% and risk adjusted WACC of 12%; Project B with Expected return of 12% and risk adjusted WACC of 10%; Project D with Expected return of 9% and risk adjusted WACC of 8%; are the projects that maximize the shareholder's value.

On the other hand, Project C with Expected return of 11% and risk adjusted WACC of 12% is harmful to shareholder value.

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Statement Of Owner's Equity Jay Pembroke started a business in April. Prepare a Statement of Owner's Equity using the following
Dovator [93]

Answer:

$2,433

Explanation:

Net Income = Sales - Expenses

where,

Sales = $3,033

and

Expenses = $600

therefore,

Net Income = $3,033 - $600 = $2,433

3 0
2 years ago
Public saving is negative when:A. there is a government budget surplus.B. there is a government budget deficit.C. the government
m_a_m_a [10]

Answer: Option (B) is correct.

Explanation:

Public saving refers to the tax revenue amount that a government left with after paying for its expenditure or spending.

Public saving = Tax revenue - Spending

Private saving refers to the after tax income of the individuals after paying for their consumption and taxes.

Suppose there is a government budget deficit, in this situation government's expenditure is greater than government's receipts. This means that tax revenue is not enough to pay out its expenditure.

Therefore, this will lead to negative public savings.

3 0
3 years ago
What is a depository institution?
Maslowich

A depository institution is a financial institution in the United States.

7 0
3 years ago
When a company expands by entering new business areas, it is called growth through __________?
garri49 [273]
When a company expands by entering a new business area, it is called growth through diversification. 

Diversity is the means of being different, new, exciting.. something not like another. When a business enters something new, it's called diversification because it's not like what they've done before. With this comes risk but huge growth potential.
7 0
2 years ago
Carol and Dave each purchase 100 shares of stock of Burgundy, Inc., a publicly owned corporation, in July for $10,000 each. Caro
tino4ka555 [31]

Answer:

See below

Explanation:

From the above information, we can deduce that the stock owned by Carol and Dave falls in value by $2,000 I.e ($10,000 - $8,000) ; it is to be noted that Carol solely has realised and recognized loss of $2,000.

Here, one of the cogent factors that determines whether a sale has taken place is if realization has been effected. Here, stock sold by Carol qualifies as a disposition while the decline in the value of stock sold by Dave does not qualify as disposition.

With regards to the foregoing, we can conclude that the federal income tax law treat the decline in the value of the stock differently for Carol and Dave.

8 0
3 years ago
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