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Vanyuwa [196]
3 years ago
7

5) Scanlin, Inc. is considering a project that will result in initial aftertax cash savings of $2.1 million at the end of the fi

rst year, and these savings will grow at a rate of 2 percent per year indefinitely. The firm has a target debt-equity ratio of .80, a cost of equity of 11 percent and an aftertax cost of debt of 4.6 percent. The cost-saving proposal is somewhat riskier than the usual project the firm undertakes; management uses the subjective approach and applies an adjustment factor of 3 percent to the cost of capital for such risky projects. Under what circumstances should the company take on the project
Business
1 answer:
rewona [7]3 years ago
4 0

Answer:

The PV of future cash flow is $22,925,764, therefore the company should take on the project

Explanation:

In order to know if the company should take on the project we have to calculate the PV of future cash flow as follows:

PV of future cash flow=<u>    D1    </u>

                                        RE-g

To calculate this formula we requre to calculate the WACC and the discount rate as follows:

WACC=(1.00/1.80×0.11)+0+(0.80/1.80×0.046)

WACC=0.0611+0+0.02044

WACC=0.081556

WACC=8.16%

After having calculated the WACC we can calculate the project discount rate as follows:

project discount rate=WACC + Additional risk factor

=8.16%+3%

=11.16%

Therefore, PV of future cash flow= <u>$2,100,000</u>

                                                            0.1116-0.02

PV of future cash flow= <u>$2,100,000</u>

                                            0.0916

PV of future cash flow=$22,925,764

The PV of future cash flow is $22,925,764, therefore the company should take on the project

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Benjamin and Amelia Hopkins have been married since 2016.
Neporo4naja [7]

Answer:

1. c. Both a and b

2. a. Yes, because Benjamin has a Social Security number.

Explanation:

According to tax laws, you can claim a child tax credit for an American dependant below the age of 17 which qualifies Harper for it. Evelyn however qualifies for a Credit for other dependents as she is a resident alien and has an Individual Taxpayer Identification Number (ITIN).

Because Benjamin has a Social Security Number, the Hopkins are indeed eligible to claim an earned income credit. Married couples filling jointly can claim the credit if either of them are U.S. citizens with a valid Social Security number.

3 0
3 years ago
Lightning strikes a home and starts a fire that destroys the structure and its contents. The lightning is the?
LenaWriter [7]

Lightning strikes home and starts a fire that destroys the structure and its contents. The lighting is the Proximate cause.

Subrogation is the term that describes most insurance companies' right to sue against a third party who has caused damage to the insured. This is done to recover the amount of damage paid to the insured by the insurance company for the damage.

The replacement cost covers the retail cost of replacing a broken, damaged, or lost item. The advantage here can be seen in the personal computer example. For example, his $1,500 laptop, purchased two years ago, is worth less than it is now brand new.

Umbrella policies are typically sold for minimum coverage of $1 million, but insurers offer these policies in increments of up to $5 million and sometimes in $100 million increments.

Learn more about  Proximate cause here brainly.com/question/14925660

#SPJ4

4 0
9 months ago
I suggest adding a report button on the profile page, this way you can report the person instead of a single post, yes, specific
sweet [91]

Answer:

I agree

Explanation:

3 0
3 years ago
. Department C is the first stage of Cohen Corporation's production cycle. The following equivalent unit information is availabl
allsm [11]

Answer:

1,657,000 units

Explanation:

The FIFO method is concerned with the work done in the current production period.

<u>Equivalent Units of Production - Conversion Costs</u>

To finish Opening Work In Process ( 85,000 x 80%)              68,000

Started and Completed [(1,430,000 - 85,000) x 100%]       1,345,000

Ending Work In Process 305,000 x 80%                               244,000

Total Equivalent Units of Production - Conversion Costs   1,657,000

therefore,

the equivalent units for the conversion cost calculation are:  1,657,000 units

6 0
2 years ago
On February 24, 2020, Allison's building, with an adjusted basis of $2,986,000 (and used in her trade or business), is destroyed
astra-53 [7]

Answer:

As a calendar-year taxpayer, Allison must make the new investment by December 31, 2020 to qualify for the nonrecognition election.

Explanation:

a) Data and Calculations:

Adjusted basis of building = $2,986,000

Insurance reimbursement = $3,881,800

Gain from loss = $895,800 ($3,881,800 - $2,986,000)

Investment in new building = $3,493,620

Purchase of stock = $388,180 ($3,881,800 - $3,493,620)

b) Allison is expected to make the election for the nonrecognition of the gain from loss in his Federal Tax return in the taxable year in which the gain with respect to the loss of the building is realized.  The return must set forth the computation of the gain and other required details.

6 0
2 years ago
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