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Ainat [17]
1 year ago
12

Wilson’s is reviewing a project with an internal rate of return of 13.09 percent and a beta of 1.42. The market risk premium is

8.1 percent, the tax rate is 35 percent, and the risk-free rate is 2.9 percent. The firm's WACC is 12.68 percent. Will the project be accepted if the WACC is used as the discount rate for the project? Should the project be accepted according to the CAPM, and why or why not?
Business
1 answer:
maria [59]1 year ago
5 0

Answer:

Accepted and rejected

Explanation:

Since the internal rate of return is 13.09% and the WACC is 12.68%

As we can see that the internal rate of return is higher than the WACC as WACC is considered as the discount rate

So the project should be accepted

And, if CAPM is used

So, the expected rate of return is

If CAPM is used

Risk-free rate of return + Beta × market risk premium

= 2.9% + 1.42 × 8.1%

= 2.9% + 11.502%

= 14.40%

And, The Internal rate of return  = 13.09%

Since the internal rate of return is less than the expected rate of return therefore the project should be rejected

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The manufacturing cost of an air-condioning unit is $544, and the full-replacement extended warranty costs $113. If the manufact
Likurg_2 [28]

Answer:

$11,457,522

Explanation:

If the full extended warranty costs are $113 per unit replaced, and 20% of the 506,970 units sold will be replaced, then the total warranty costs are:

total warranty costs = total number of units sold x percentage of units that need warranty replacement x cost per unit replaced

total warranty costs = 506,970 units x 20% x $113 per unit = $11,457,52

7 0
2 years ago
Read 2 more answers
Mart's Boutique has sales of $820,000 and costs of $540,000. Interest expense is $36,000 and depreciation is $59,000. The tax ra
Rufina [12.5K]

Answer:

$146,150.00

Explanation:

Net income is net of taxes.

Here,

Sales = $820,000.00

Less: Costs = -$540,000.00

Gross profit = $280,000.00

Less: Finance Costs

Interest = -$36,000.00

Depreciation = -$59,000.00

Net profit before Tax = $185,000.00

Less: Tax @ 21% of $185,000.00 = - $38,850.00

Net Income (after tax) = $146,150

Net income is always computed after tax.

$146,150.00

3 0
1 year ago
16. Which of the following cuts is ideal for smoking?
Ludmilka [50]

[ Answer ]

\boxed{Brisket}

[ Explanation ]

Brisket - Cut from breast or lower chest. Brisket comes from a cow or veal

Brisket is ideal for smoking because of its high fat content. When smoking meat, if the meat does not have lots of fat and is thing, the smoking process can dry out the meat. With brisket, the meat is very fat, causing the meat not to dry out and getting a tender juicy flavor.

When lighting a campfire or barbecue, you may notice lots of smoke. The smoke may affect your breathing, make you thirsty, or dry you out. This is the same affect of the meats. The smoke provides lots more flavor for the meat, and dries it out, if there is not enough fat on the meat.

\boxed{[ \ Eclipsed \ ]}

7 0
2 years ago
Read 2 more answers
Marko Shioda, master scheduler at Randall Manufacturing Company, prepared the following MPS for one of the firm's major end prod
Sergio039 [100]

Answer:

Explanation:

MPS Week 1 = 150

It takes 3 widgets for 1 WhatchaMacalit.

Widgets required Week 1 = 150 *3 = 450

Painting hours required Week 1 = 450*0.5 = 225 hours

Painting hours required Week 2 = 120*3*0.5 = 180 hours

Similarly, Week 3 = 75 hours

Week #        1 2 3

Widget paint 225 180 75

5 0
1 year ago
Equipment costing $b0000 was destroyed when it caught on fire. At the date of the fire, the accumulated depreciation on the equi
Musya8 [376]

Answer: c. gain on disposal of $140000.

Explanation:

The cost of the equipment is $260,000.

When the fire occurred, the book value of the equipment was:

= Cost of equipment - Accumulated depreciation

= 260,000 - 100,000

= $160,000

A check of $300,000 was received from insurance. The gain on disposal is:

= Replacement cost - book value

= 300,000 - 160,000

= $140,000

This amount will be credited to the Gain on Disposal account because an increase is credited.

8 0
1 year ago
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