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kondaur [170]
2 years ago
15

The required return on the stock of Moe's Pizza is 10.4 percent and aftertax required return on the company's debt is 3.28 perce

nt. The company's market value capital structure consists of 65 percent equity. The company is considering a new project that is less risky than current operations and it feels the risk adjustment factor is minus 1.5 percent. The tax rate is 35 percent. What is the required return for the new project
Business
1 answer:
Katarina [22]2 years ago
4 0

Answer:

WACC - new project = 6.408% rounded off to 6.41%

Explanation:

The WACC or weighted average cost of capital is the cost of a firm's capital structure. The capital structure can consist of one or more of the following components namely debt, preferred stock and common equity. The WACC is calculated as follows,

WACC = wD * rD * (1 - tax rate)  +  wP * rP  +  wE * rE

Where,

  • w represents the weight of each component
  • r represents the cost of each component
  • D, P and E represents debt, preferred stock and common equity
  • rD * (1 - tax rate) is the after tax cost of debt

We first need to calculate the WACC of the company and then adjust it for the new project.

WACC = 35% * 3.28%  +  65% * 10.4%

WACC = 7.908%

As the new project is less risky and has an adjustment factor of -1.5%, the required rate of return for the new project will be,

WACC - new project = 7.908%  -  1.5%  

WACC - new project = 6.408% rounded off to 6.41%

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k0ka [10]

Services act as a middleman, allowing individuals to securely send and receive money is A. p2p

<h3>How to illustrate the information?</h3>

It should be noted that p2p simply means the peer to peer platform that allows two individuals to be able to interact directly without the third party.

Peer-to-peer (P2P) lending eliminates the need for a middleman financial institution by allowing borrowers to get loans directly from other borrowers. P2P lending has become much more popular as a substitute for traditional funding thanks to websites that make it possible.

It should be noted that they act as services that act as a middleman, allowing individuals to securely send and receive money.

Therefore, the correct option is A.

Learn more about money on:

brainly.com/question/24373500

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7 0
1 year ago
Which of the following is an element of economic forces? a) New production forces b) Health, food, stress c) Competitors and sup
Ksju [112]

Competitors and supply chain is an element of economic forces.

<h3>What are economic forces?</h3>

Economic forces are those factors that assist a firm in terms of its competitiveness in the environment it operates.

Here, economic forces have a direct impact on business and are essential factors that can help an organization in accomplishing its targets.

Learn more about economic forces here: brainly.com/question/13721949

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4 0
2 years ago
State any four uses of funding in a new business
miss Akunina [59]

Answer:

Some of these funding options are for Indian business, however, similar alternatives are available in different countries.

  • Bootstrapping your startup business
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  • Get Angel Investment In Your Startup
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7 0
3 years ago
You are the chief financial officer for a firm that sells digital music players. Your firm has the following average-total-cost
Finger [1]

Answer:

False

Explanation:

Since for finding out whether the offer is accepted or not, first we have to determine the total cost at 600 number of players and for 601 number of players which is

The total cost of 600 players is

= 600 × $300

= $180,000

The total cost of 601 players is

= 601 × $301

= $180,901

Now the marginal cost is 601 player is $901 which is difference between the $180,000 and $180,901 that is higher than the offered price i.e $550

Therefore, the offer should not be accepted

6 0
3 years ago
The two dimensions of the competing values framework are
Wewaii [24]

Answer: The two dimensions of the competing values framework are the internal focus and imagination and the flexibility and discretion.

Explanation: There are 2 dimensions but 4 models within the competing values framework. The reason this model is called the competing models framework is because each model conflicts the message of another. These framework models do not agree and often times compete for what the best option to make is.  

4 0
3 years ago
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