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stira [4]
2 years ago
5

A start-up chemical company has an average cost of capital of 15% per year. Additionally, it has a long-term goal of making at l

east a 20% per year rate of return on all investments; however, because of market opportunity the ROR can be reduced for the current project by 3%. If the company acquired $50 million in venture capital, how much did it have to earn in the first year
Business
1 answer:
nika2105 [10]2 years ago
7 0

The start-up chemical company must earn <u>$8.5 million </u>in the first year.

<h3>What is Rate of Return (ROR)?</h3>

The rate of return (ROR) is the net gain of an investment for a period. The dollar ROR is computed by deducting interest on acquired funds (debts) from the earnings before interest.  It can be expressed as a percentage of the initial investment.

Data and Calculations:

Average cost of capital = 15%

Expected rate of return = 20%

Reduction in the rate of return = 3%

New expected rate of return (ROR) = 17% (20% - 3%)

Venture capital funds = $50 million

Interest expense on venture capital = $7.5 million ($50 million x 15%)

Earnings in the first year = $8.5 million ($50 million x 17%)

Thus, the start-up chemical company must earn $8.5 million in the first year.

Learn more about rate of return at brainly.com/question/25895372

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Darlene Company had checks outstanding totaling $5,400 on its June bank reconciliation. In July, Darlene Company issued checks t
Pie

Answer:

b. $18,000

Explanation:

The computation of outstanding checks is shown below:-

Outstanding checks as of the end of July = Start with outstanding checks as of June + Amount of checks issued in July - Amount of checks that cleared in July

= $5,400 + $38,900 - $26,300

= $44,300 - $26,300

= $18,000

Note, The $300 check was issued by a customer, not Darlene.

So, for computing the outstanding checks as of the end of July we simply applied the above formula.

4 0
3 years ago
Elise is the marketing manager in a travel company. She is planning to place an advertisement in local newspapers to promote her
Scorpion4ik [409]

Answer:

The answer is C. link the advertisements to online promotions.

Explanation:

Now lets take a look at it one by one and see why C is the answer.

As in option A, she can ask a few friends whether they've seen the ad or not, but their replies would not accurately show the success of the promotion strategy.

In Option B,  it take some time to measure the results and the quarterly sales numbers can be influenced by many factors and may not reflect the impact of this specific promotional campaign.

Option D is irrelevant, Elise's company sales and the sales of the newspapers are not related. So we can not take this as an answer.

Option C however is very applicable. If you link the advertisements to online promotions, when those who read the news paper comes to check the online promotion, we can see how well has the ad performed based on the number of online enrollments of the readers.

6 0
3 years ago
Casper and cecile are divorced this year. as part of the divorce settlement, casper transferred stock to cecile. casper purchase
andre [41]

<span>Separate maintenance payments and alimony are deductible by the party creating the payments and are includible in the gross income of the party getting the payments. Therefore, income is shifted from the income earner to the income beneficiary, who is better able to pay the tax on the amount received.</span>

6 0
3 years ago
Type the correct answer in the box. spell all words correctly. what is the third primary decision when it comes to making financ
OLEGan [10]

During the process of making financial decisions, the three primary decisions are spending, saving, and <u>planning</u>.

What is a financial decision?

A financial decision can be defined as a strategic process through which an individual or business firms save, plan, and decides on how to spend its revenues over a specific period of time.

This ultimately implies that, the three primary decisions during the process of making financial decisions include the following:

  • Spending
  • Saving
  • Planning

Read more on financial decisions here: brainly.com/question/12482082

#SPJ4

6 0
1 year ago
What is the expected annual capital gain yield for Orange Corp stock, based on the Constant Dividend Growth Model
lyudmila [28]

Complete Question:

What is the expected annual capital gain yield for Orange Corp stock, based on the Constant Dividend Growth Model? The company plans to pay an annual dividend of of $4.12 per share in one year. The expected annual growth rate of the dividend is 12.9%, and the required rate of return for the stock is 16.63%. Answer as a percentage, 2 decimal places (e.g., 12.34% as 12.34).

Answer:

12.9%

Explanation:

As we know that:

Capital Gain Yield  = (P1 - P0) / P0

Step 1: Find P0

Po = D1  / (Ke - g)

Here

D1 is $4.12 per share

Ke is 16.63%

g is 12.9%

By putting values, we have:

Po = $4.12 / (16.63% - 12.9%)

= $110.46

Step 2: Find P1

P1 = D2  / (Ke - g)

Here

D2 = D1 * (1 + 12.9%) = $4.12 per share  * (1 + 12.9%) = $4.65

Ke is 16.63%

g is 12.9%

By putting values, we have:

Po = $4.65 / (16.63% - 12.9%)

= $124.70

<u>Step3: Find Annual Capital Gain Yield</u>

Capital Gain Yield  = (P1 - P0) / P0

Now by putting values, we have:

Capital Gain Yield  = ($124.7 - $110.46) / $110.46

= 12.9%

6 0
3 years ago
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