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Over [174]
3 years ago
10

Westchester Corp. is considering two equally risky, mutually exclusive projects, both of which have normal cash flows. Project A

has an IRR of 11%, while Project B's IRR is 14%. When the WACC is 8%, the projects have the same NPV. Given this information, which of the following statements is CORRECT?a. If the WACC is 9%, Project A's NPV will be higher than Project B's. b. If the WACC is greater than 14%, Project A's IRR will exceed Project B's. c. If the WACC is 13%, Project A's NPV will be higher than Project B's. d. If the WACC is 9%, Project B's NPV will be higher than Project A's. e. If the WACC is 6%, Project B's NPV will be higher than Project A's.
Business
1 answer:
inn [45]3 years ago
5 0

Answer:

d. If the WACC is 9%, Project B's NPV will be higher than Project A's.

Explanation:

The internal rate of return is the return in which the NPV is zero i.e cash inflows equal to the initial investment

While the WACC refers to the cost of capital by considering the capital structure i.e cost of equity, cost of preferred stock and cost of debt by taking their weightage

Now if the WACC is 9% so project B NPV would be higher as compared to project A as we can see that project B IRR is greater than the project A IRR

Therefore option d is correct

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"A customer is long the Swiss Franc at a cost of $.60 per SF. The customer wishes to place a collar on the position using PHLX S
tia_tia [17]

Answer:

To create the collar, the customer would: <u>buy 1 PHLX 59 SF Call and sell 1 PHLX 61 SF Call.</u>

Explanation:

The meaning of a "collar" is that a put is bought at a strike price that is less than the price of the underlying instrument (this implies that a floor has been put on the price of the instrument); and that a call is disposed at a strike price which is higher than the price of the underlying instrument (this indicates that a ceiling above which the instrument will be called away has been created).

When a collar is put on the price, it indicates that the customer is majorly giving a guarantee for the underlying instrument's minimum and maximum price.

This should make the net cost of the collar to be close to zero due to the fact that the two contracts are "out the money" and also because the premium paid to buy the put is offset by the premium received when the call was sold.

Therefore, since customer in the question wishes to place a collar on the position using PHLX SF FLEX options, he would <u>buy 1 PHLX 59 SF Call and sell 1 PHLX 61 SF Call</u> to create the collar.

3 0
4 years ago
Is anyone a Steelers fan? Or Washington FT fan
vodka [1.7K]

Answer:

steelersssss all the way babyyyy

Explanation:

6 0
3 years ago
The flow of money received on a sometimes a weekly, monthly, or yearly basis is known as __________.
morpeh [17]
The flow of money received on a sometimes a weekly, monthly, or yearly basis is known as SALARY.

Salary is the compensation employees received from their employers. It can be weekly, monthly, or yearly basis depending on the contract agreement between the two parties.
4 0
3 years ago
1.2 Explain the concept of the labour market to a Grade 12 school-leaver. Give a
Marianna [84]

Answer:

The labor market is the phrase used to describe the supply of labor by employees and demand of labor by the employers as such there is an interaction between the workers and the employers where wage is paid to the workers by the employers for the labor the workers supplied

Being educated gives an employee the capacity to be more productive and gives an indication of the potential of prospective employees to recruiters and employers. Therefore, qualifications attained are an advantage when seeking employment alongside many several other job seekers

Therefore, a grade 12 school-leaver competing for a job alongside several others with similar or tertiary education is less likely to secure a desired job or vocation

However, with a tertiary education, such job seekers would more readily convince recruiters about their ability to satisfactorily perform their desired job

Explanation:

6 0
3 years ago
Liberty is calculating her cost of goods sold to enter on her Schedule C. Her inventory at the beginning of the year amounted to
MakcuM [25]

Answer:cost of goods sold for  Liberty to enter on her Schedule C = $12,000

Explanation:

 Cost of goods sold (COGS) of a company are all the  costs ie( the raw materials and labor ) involved directly in the production of the particular  goods sold by the company.

Given

Beginning Inventory = $50,000

Purchases regarding Labour and materials= $20,000

Ending inventory = $58,000

Cost of Goods Sold is calculated as Beginning Inventory + Purchases During the Period – Ending Inventory

$50,000 + $20,000 - $58,000

$70,000 - $58,000

$12,000

5 0
3 years ago
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