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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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If government spending occurs, there will be a(n)crowding out of private-sector investors, described as a(n) opportunity cost of that spending.

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3 0
1 year ago
Here are the data for the past 21 months for actual sales of a particular product:LAST YEAR THIS YEARJanuary 325 260February 440
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Answer:

Fore cadet for fourth quarter us $1085

Explanation:

One Quarter = 3 months

Demand for quarter 1 = 325 + 440 + 450 = 1215

Quarter Demand in Each Quarter Weighted Forecast

1 1215

2 1280

3 1125

4 1610

5 1010

6 1220

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Weighted moving Average Forecast = ((0.25 * 1010) + (0.25 * 1220) + ( 0.5 * 1055) = 1085

Forecast for the fourth quarter is 1085

7 0
3 years ago
Glaston Company manufactures a single product using a JIT inventory system. The production budget indicates that the number of u
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Answer:

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Explanation:

Giving the following information:

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To calculate the budgeted overhead, we need to determine the total variable overhead for the month:

Budgeted overhead= fixed overhead + total variable overhead

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6 0
3 years ago
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Answer:

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Outstanding amount of checks issued = Checks outstanding in beginning of June + Checks issued during the month of June - Checks cleared in June

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Therefore, The amount of outstanding checks on Harris Company's June bank reconciliation should be $42700.

3 0
3 years ago
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cestrela7 [59]

Answer:

Explanation:

Attached is the solution

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3 years ago
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