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Gnom [1K]
3 years ago
13

A firm is considering a project that will generate perpetual cash flows of $50,000 per year beginning next year. The project has

the same risk as the firm's overall operations. If the firm's WACC is 12%, and its debt-to-equity ratio is 1.33, what is the most it could pay for the project and still earn its required rate of return
Business
1 answer:
Vesna [10]3 years ago
5 0

Answer:

Present value = $416666.6667 rounded off to $416666.67

Explanation:

To calculate the most the firm could pay for the project, we will need to calculate the present value of the project when discounted at the WACC for the project, which is equal to the WACC for the firm in this case. The cashflows from the project will be perpetual, thus we will use the formula for the present value of perpetuity.

Present value of perpetuity = Cash flow / r

Where,

r is the rate of discount or discount factor which in this case is WACC

Present value = 50000 / 0.12

Present value = $416666.6667 rounded off to $416666.67

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Answer:

e. a road map for the marketing activities of an organization for a specified future time period, such as one year or five years.

Explanation:

A company's marketing plan generally involves specific periods of time, and usually last more than one year, but they aren't long enough to be considered as long term goals (more than 5 years). They follow the company's marketing strategies (long term goals), coordinate marketing activities and set short term goals.

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A manager experiences a cashier shortage that averages $50. 00 per day. if the manager's operation is open 360 days per year, wh
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A manager experiences a cashier shortage that averages $50. 00 per day. if the manager's operation is open 360 days per year, 1800 will be this manager's annual revenue loss due to cashier shortages

In colloquial language, the average is a single number representing a list of numbers, usually the sum of the numbers divided by the number of numbers in the list. For example, the average of the numbers 2, 3, 4, 7, and 9 is 5.

Suppose there are four types of means: mean, mode, median, and range. In fact, the range is a measure of spread or spread, while others are the most common "measure of central tendency".

Noun. Mean, Mean, Median, Standard means something that represents the midpoint. The average is the quotient obtained by dividing the sum of a set of numbers by the number of numbers. scored an average of 85 points on the test. The mean is the simple mean or the middle value between the two extremes.

In colloquial language, the average is a single number representing a list of numbers, usually the sum of the numbers divided by the number of numbers in the list. For example, the average of the numbers 2, 3, 4, 7, and 9 is 5.

Suppose there are four types of means: mean, mode, median, and range. In fact, the range is a measure of spread or spread, while others are the most common "measure of central tendency".

Noun. Mean, Mean, Median, Standard means something that represents the midpoint. The average is the quotient obtained by dividing the sum of a set of numbers by the number of numbers. scored an average of 85 points on the test. The mean is the simple mean or the middle value between the two extremes.

Learn more about averages   here

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#SPJ4

5 0
1 year ago
Beale Manufacturing Company has a beta of 1.8, and Foley Industries has a beta of 0.80. The required return on an index fund tha
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Answer:

3.5%

Explanation:

We will apply asset pricing model to calculate cost of equity (required rate of return). The capital asset pricing model is stated as below:

Cost of equity = Risk-free rate + Beta x Market risk premium

Putting all the number together, we have:                          

Cost of equity (Beale) = 5.5% + 1.8 x (9% - 5.5%) = 11.8%

Cost of equity (Foley) = 5.5% + 0.8 x (9% - 5.5%) = 8.3%

Cost of equity (Beale) - Cost of equity (Foley) = 11.8% - 8.3% = 3.5%

<em />

<em>Note: You can also do quick calculation as below:</em>

<em>Cost of equity (Beale) - Cost of equity (Foley) = (Beta of Beale - Bete of Foley) x Market risk premium = (1.8 - 0.8) x (9% - 5.5%) = 3.5%</em>

6 0
3 years ago
quizlet calaf’s drillers erects and places into service an off-shore oil platform on january 1, 2021, at a cost of $10,000,000.
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quizlet calaf’s drillers erects and places into service an off-shore oil platform on january 1, 2021, at a cost of $10,000,000. calaf is legally required to dismantle and remove the platform at the end of its useful life in 10 years. calaf estimates it will cost $1,000,000 to dismantle and remove the platform at the end of its useful life in 10 years. (the fair value at january 1, 2021, of the dismantle and removal costs is $450,000.) prepare the entry to record the asset retirement obligation.

Oil Platform 450,000

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What is  asset retirement obligation?

An asset retirement obligation is a contractual requirement for the retirement of a tangible long-lived asset, the timing of which may depend on the occurrence of a future event outside the control of the entity bearing the obligation.

Therefore,

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