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3 years ago

Firms that make investment decisions based on the payback rule may be biased toward rejecting projects:__________

Business

1 answer:

Artist 52 [7]3 years ago

6 0

Answer:

c. with late cash inflows.

Explanation:

The Payback method focus on the time it takes for the Cash Inflows of the Project to equal the Initial investment made into the project. This means that projects which takes a short period (early cash flows) are preferred over those that take a long period (late cash flows) for the cash flows to equal the initial cost.

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Driver Products recently paid its annual dividend of $2, and reported an ROE of 15%. The firm pays out 50% of its earnings as di

iragen [17]

Answer:

$29.70

Explanation:

Retention ratio = 1 - payout ratio

= ( 1 -0.5 )

= 0.5

Growth rate, g = ROE × Retention ratio

= 0.15 × 0.5

= 0.075

= 7.5%

Required return = Risk - free rate + [ Beta × (Market rate- risk-free rate) ]

= 2.5% + 1.44 × (11% - 2.5%)

= 14.74%

Intrinsic value = $\frac{\textup{D1}}{\textup{(Required return-Growth rate)
}}$

= $\frac{\textup{2}\times(1+0.075)}{\textup{(0.1474-0.075)
}}$

= 29.69 ≈ $29.70

5 0

2 years ago

The traditional method of making product mix decision considersA.producing the products with the highest contribution margins fi

Helga [31]

Answer:

The correct answer is letter "A": producing the products with the highest contribution margins first.

Explanation:

A product mix refers to the different assets a company may posses in its portfolio. Those products or services are usually similar or satisfy almost the same need. They are measured according to their width, length, depth, and consistency. The product mix avoids that the company relies on a single product or service as a source of income. Besides, the product or service with the fastest and highest revenues is the one to be produced first.

8 0

3 years ago

You have an opportunity to invest in Australia at an interest rate of 8%. Moreover, you expect the Australian dollar (A$) to app

earnstyle [38]

Answer:

10.16%

Explanation:

The computation of the effective return for this investment is shown below:

Let us assume that we invested an amount in Australian dollars 100

The return is 8%

After one year, the amount is 108

Now the converting amount is 110.16 (108 × 102%)

Now the effective rate for this investment is

= 110.16 - 100

= 10.16%

7 0

3 years ago

g . Kings Donut Inc common stock sells for $39.86 a share at a market rate of return of 9.5%. The company just paid its annual d

Simora [160]

6.29% is the rate of growth

<u>Explanation:</u>

<u>The following formula is used </u>

Price = D1 / ke -g

39.86 = 1.2 multiply with (1 + g) / 0.095 - g

3.7867 – 39.86 g = 1.2 + 1.2 g

2.5867 = 41.06 g

Now, we have to calculate the value of g

g = 2.5867 divide 41.06

= 0.0629

= 6.29 %

Where:

G = growth, ke = market rate of return, D1 = dividend ( annual), P = price of the share of company

7 0

2 years ago

For 2019, Skresso Co. reported $1.82 of earnings per share of common stock. During 2020, the firm had a 4% common stock dividend

mart [117]

Answer:

$1.75

Explanation:

Earnings per share to be reported = Earnings per share of commo stock * (1 - 4%)

Earnings per share to be reported = $1.82 * 96%

Earnings per share to be reported = $1.7472

Earnings per share to be reported = $1.75

So, the 2019 earnings per share to be reported in the annual report for 2020 are $1.75.

4 0

2 years ago