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3 years ago

Business portfolio analysis is defined as the process in which management __________.

Business

1 answer:

Aleks04 [339]3 years ago

6 0

Assesses the attractiveness of an SBU's market and the strength of its position in the market.

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You are given the following information for Watson Power Co. Assume the company’s tax rate is 23 percent. Debt: 8,000 5.7 percen

____ [38]

Answer:

the company's WACC is 10.04%

Explanation:

Weighted Average Cost of Capital (WACC) is the minimum return that a project must offer before it can be accepted. It shows the risk of the company.

Capital Source Market Value Weight Cost Total Weight

Debt $8,400,000 27.71% 4.389 % 1.22%

Common stock $24,190,000 71.17% 12.2% 8.68%

Preferred stock $1,400,000 4.12% 3.5% 0.14%

Total $ 33,990,000 100.00% 10.04%

Calculation of Market Value and Cost of Debt

Market Value = 8,000×($1,000×105%) = $8,400,000

Cost of Debt = interest × (1 - tax rate)

= 5.7% × ( 1-0.23)

= 4.389 %

Calculation of Market Value and Cost of Common stock

Market Value = 410,000× $59 = $24,190,000

Cost of Common stock = Risk free Rate + Beta × Market Premium

= 4.5% + 1.10× 7%

= 12.2%

Calculation of Market Value and Cost of Common stock

Market Value = 17,500× $80 = $1,400,000

Cost of Preferred stock = 3.5%

7 0

3 years ago

kipiarov [429]

a volcanic island forms and subsides

3 0

3 years ago

An airline is considering a project of replacement and upgrading of machinery that would improve efficiency. The new machinery c

Nikolay [14]

Answer:

$172.25

Explanation:

initial outlay for the project = -$350

cash flow years 1-5 = [($300 - $135 - $70) x (1 - 36%)] + $70 (depreciation expense) = $60.80 + $70 = $130.80

using an excel spreadsheet and the NPV function, we can calculate the project's NPV with an 8% discount rate:

=NPV(8%,130.80,130.80,130.80,130.80,130.80) - $350 = $522.25 - $350 = $172.25

we can also do it manually:

NPV = -$350 + $130.80/1.08 + $130.80/1.08² + $130.80/1.08³ + $130.80/1.08⁴ + $130.80/1.08⁵ = $172.25

6 0

3 years ago

Marielle Machinery Works forecasts the following cash flows on a project under consid- eration. It uses the internal rate of ret

ivann1987 [24]

Answer:

a. Project’s IRR is 18.28%

b. Project should be accepted and pursued because it IRR is higher than the required rate of return.

Explanation:

Cash flows are missing a similar question is attached and followoing answer is made accordingly.

Year 0 1 2 3 NPV

Cash flows -$10,000 $0 $7,500 $8,500

PV @ 10% -$10,000 $0 $6,198 $6,386 = $2,584

PV @5% -$10,000 $0 $6,802 $7,342 = $4,144

IRR = 0.05 + ( 4,144 / (4,144-2,584)) x (0.1-0.05) = 18.28%

7 0

3 years ago

Shipping the Good Apples Out?

ale4655 [162]

Yes. The marginal utility per dollar of each good is equal.

No. The marginal utility per dollar of of high-quality apples is greater than the marginal utility per dollar of low-quality apples.

more; fewer

Brainliest Please :)

5 0

3 years ago