Answer:
IRR = 5.05%
Explanation:
Internal rate of return (IRR) refers to the interest rate that makes the net present value (NPV) both the positive and negative cash flows of an investment equal zero.
See the two attached, an excel file and a photo file, for the calculation and further explanation. Note that the two files contain the same information but they are both attached to ease learning.
Answer: 11.65%
Explanation:
First find cost of equity using CAPM:
= Risk free rate + Beta * Market risk premium
= 3.4% + 1.37 * 8.2%
= 14.6%
Debt to equity = 0.45
This means that weight of debt is:
= 0.45 / (1 + 0.45)
= 31.03%
Weight of equity:
= 1 - 31.03%
= 68.97%
WACC = (Weight of equity * cost of equity) + (weight of debt * cost of debt * (1 - tax))
= (68.97% * 14.6%) + (31.03% * 7.6% * (1 - 34%))
= 11.63%
= 11.65% as per options
Answer:
$80 million
Explanation:
The total income received by the plant's employees during the year will be $40 million (= 1,000 employees x $40,000 per employee). Since their propensity to consume is 2/3, they the employees will spend $26.67 million and save $13.3 million.
The money multiplier can be calculated using the formula: money multiplier = 1 / (1 - MPC) = 1 / (1 - 0.67) = 1 / 0.33 = 3
To determine the total income effect in St. Louis we have to multiply the money spent times the money multiplier = $26.67 million x 3 = $80 million
<span>Resale restrictions have been prosecuted under the Sherman Act. Today, however, the courts apply the rule of reason in such cases and consider whether such restrictions have a "demonstrable economic effect."
A rule of reason is when authorities step in to evaluated restrictive business practices and their anticompetitive effects to decide if the way they are going about their practices should be allowed or prohibited. This is used to help interpret the Sherman Antitrust Act and it's a huge part of the United States antitrust laws. </span>