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mylen [45]
3 years ago
6

Burnham Brothers, Inc. has no retained earnings since it has always paid out all of its earnings as dividends This same situatio

n is expected to persist in the future. The company uses CAPM to calculate its cost of equity and its target capital structure consists of common stock, preferred stock, and debt. Which of the following events would reduce its WACC?
a. The flotation costs associated with issuing new common stock increase.
b. The company's beta increases.
c. Expected inflation increases.
d. The market risk premium declines.
Business
1 answer:
RUDIKE [14]3 years ago
6 0

Answer: d. The market risk premium declines.

Explanation:

The Weighted Average Cost of Capital (WACC) takes into account the cost of equity and debt which means that if either of these costs increase, the WACC will increase as well and if any decrease, WACC will follow suit.

Market risk premium is used in the calculation of the cost of equity when using CAPM in the following manner:

= Risk free rate + Beta * Market risk premium

As can be inferred from the above formula, if the market risk premium declines, a lower cost of equity will result which would then reduce the WACC as well.

You might be interested in
The current controllable margin for Henry Division is $93,000. Its current operating assets are $300,000. The division is consid
Inessa [10]

Answer:

Return on investment is decreased by 3.30%

Explanation:

The computation of the return on investment is shown below:

=  (Controllable margin ÷ operating assets) × 100

= ($93,000 ÷ $300,000) × 100

= 31%

Now the new controllable margin equals to

= $93,000 + $15,000

= $108,000

And, the new operating assets would be

= $300,000 + $90,000

= $390,000

So, the new return on investment equals to

= ($108,000 ÷ $390,000) × 100

= 27.70%

The return on investment is decreased by

= 31% - 27.70%

= 3.30%

7 0
3 years ago
An intangible benefit is called a <br><br> a) commodity<br> b) Service<br> c) market<br> d) goods
Dennis_Churaev [7]

A

Explanation:

using the internet and the process of elimination, A is your answer

7 0
3 years ago
Read 2 more answers
Keeping current with the changes in the marketplace is often a real challenge to marketers, as sometimes changes must take place
Elena-2011 [213]

Answer: Please refer to Explanation

Explanation:

1. More customers are indeed purchasing online in this ever developing technological scene in this 21st century. One just has to look at the value of Amazon with it's over a trillion dollars market Capitalization. They have cornered the online scene and are reaping the benefits.

Things are looking quite bleak for offline retailers because these online stores offer one great thing, Convenience. Along with that they offer things like discounts and free delivery.

To reverse the trend that online stores have, offline retailers need to MATCH the SERVICES they OFFER as well as CAPITALIZE on the services they DON'T OFFER.

For instance, online stores do not have that personal touch of a sales person guiding them and explaining the perks of a product. In essence, retailers should work on their CUSTOMER SERVICE. They should treat customers in such a way that the customers would always want their assistance when buying things and would not mind coming all the way to the store to buy it. This is one way to hit them in places they don't offer services in.

Then you can also hit them in areas they rule. Such as opening a small website and marketing your goods. The world is moving online and to avoid it is death. Make a small website that has your products and offer delivery services coupled with telemarketing to explain anything needed.

.

.

.

2. Brick and Mortar stores are still very important even in this day and age. With Brick and Mortar stores things like trust are easier to establish. This is because when you come to buy your goods you can touch them, you can see and smell them, you KNOW what you ARE BUYING. With online sites you can sometimes buy something and another thing arrives and returning it can be a hassle. With Brick and Mortar stores you can buy knowing that you bought what you saw you wanted and even if you want to return it you can.

Brick and Mortar stores also provide an actual SHOPPING EXPERIENCE because when you're in them you're surrounded by goods not just staring at a screen. You can also socialise with people here and build valuable relationships.

Brick and Mortar stores are still very much important.

5 0
3 years ago
U
oksian1 [2.3K]

The descriptions to cases that will possibility be addressed by a Trial Balance are:

  • can detect the accuracy of the accounting process(possible)
  • can help check whether the debit side is equal to the credit side(possible)
  • can help prepare the income statement(possible)
  • helps serve as a proof of the application of the double-entry system(not possible)
  • can help check whether a particular transaction has been completely omitted(not possible)

<h3>What is trial balance?</h3>

A trial balance can be regarded as  bookkeeping worksheet which contains the ledger that is arranged into  debit and credit account column .

Therefore, with trial balance, one can check whether the debit side is equal to the credit side.

learn more about trial balance at:brainly.com/question/24217989

#SPJ1

3 0
2 years ago
1.
jolli1 [7]
<span>1. Women have a greater BAL than men of the same weight because women have less alcohol dehydrogenase. This means that women metabolizes the alcohol differently from men due to our large body fat.

2. The statement "How quickly other drugs reach the bloodstream varies depending upon how the drug is put into the system and the type of drug, the age of the user, and the weight of the user." is true. Because the body will perform differently at different ages of human.

3.  Individuals eliminate alcohol from their bodies at an approximate rate of  .015 BAL per hour.

4. Alcohol is absorbed by the body much faster than food because Alcohol is absorbed in the liver. That is why if a person suffers from alcoholism, his liver will be the first one to damage.

5. Excretion rates of drugs vary greatly depending upon the type of drug and length of time since it was ingested. Because drugs differ in their functions and their effects to the human body when ingested.

6. What percentage of alcohol is absorbed by the small intestine?
50-60%

7. Once the BAL has peaked and started to go down, people who have been drinking believe they are much more alert than they really are.

8. Different beverages may be absorbed at slightly different rates because of the drink's chemical make-up

9. The statement that "Alcohol has to be broken down by the digestive system." is false

10. The more alcohol-concentrated a beverage is, the more likely it will cause a hangover</span>
5 0
3 years ago
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