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elena55 [62]
3 years ago
10

Lancashire Railway Company (LRC) has two divisions, L and H. Division L is the company’s low-risk division and would have a weig

hted average cost of capital of 8% if it was operated as an independent company. Division H is the company’s high-risk division and would have a weighted average cost of capital of 14% if it was operated as an independent company. Because the two divisions are the same size, the company has a composite weighted average cost of capital of 11%. Division H is considering a project with an expected return of 12%. Should Lancashire Railway Company (LRC) accept or reject the project?
Business
1 answer:
Aleks [24]3 years ago
4 0

Answer:

Lancashire Railway Company (LRC)

Lancashire Railway Company (LRC) should reject the project.  The basis for rejecting Division H's project is that its return (12%) is less than the risk-based cost of capital for the division (14%).

Explanation:

a) Data:

Division L's weighted-average cost of capital = 8%

Division H's weighted-average cost of capital = 14%

Weight of Division L = 50%

Weight of Division H = 50%

Company composite weighted average cost of capital = 11% (8% * 50%) + (14% * 50%)

Expected return from a proposed project for Division H = 12%

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77julia77 [94]

Answer:

$24.38

Explanation:

The computation of the one share of worth is shown below:

= Eight-year dividend ÷ (Required rate of return - growth rate)

where,  

Next year dividend for eight-year s would be

= Annual dividend × (1 + growth rate)^number of years

= $1.18 × (1 + 3.25%)^8

= $1.18 × 1.291577535

= $1.524061492

The other items rate would remain the same

Now placing these values to the formula above

So, the price would equal to

= $1.524061492  ÷ (9.5% - 3.25%)

= $24.38

6 0
3 years ago
Which of the following is a lasting impact resulting from 20th-century banking reforms in the United States
tresset_1 [31]

The lasting impact resulting from 20th-century banking reforms in the United States is "the reforms approved the Board to determine reserve requirements and interest rates for deposits at member bank."

The banking reforms made in the 20th century in the United States are many, and many of these reforms are still applicable today.

Some of the lasting effects of these reforms include the following:

The Board of Governors to determine the monetary policy.

The reforms established the Federal Deposit Insurance Corporation.

The reforms also separate commercial banks from investment banks.

Hence, in this case, it is concluded that the many banking reforms made in the 20th century still exist today.

Learn more here: brainly.com/question/12008240

7 0
3 years ago
Hayward Company, a manufacturing firm, has supplied the following information from its accounting records for the month of May:
ira [324]

Answer:

Can you simplify your question. We ask of you to simplify the question so its easier to com up with a answer

Explanation:

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8 0
4 years ago
An employee starts the execution of an OLAP application that uses a lot of computational resources while executing.​ Normally, t
denpristay [2]

Answer:

(D) denial of service

Explanation:

Denial of service -

It is a type of cyber - attack where offender tries to make the source of network or the machine unavailable for the user via disturbing the service of the of the internet .

The task of denial of service is done by flooding the machine or the source with many requests in a way to overload the system .

Hence , from the question , the example shown in the question is about denial of service .

8 0
3 years ago
Pastoria Enterprises has scheduled raw material purchases of $100,000 in January, $130,000 in February, and $150,000 in March. T
IRINA_888 [86]

Answer:

B

Explanation:

The question asks to calculate how much will be disbursed by the company in February.

Firstly , we know that the company disburses 75% in the month of purchase and 25% during the month after purchase.

Now, 75% of $130,000 would be disbursed as February’s own payment:

Mathematically 75/100 * 130,000 = 97,500

Also, we should not forget that the company disburses 25% of previous month during the current. That is 25/100 * 100,000 = 25,000

Total amount disbursed is thus 25,000 + 97,500 = $122,500

6 0
3 years ago
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