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2 years ago

An all-equity firm is considering the following projects:

Business

1 answer:

FromTheMoon [43]2 years ago

4 0

Answer:

Projects Y and Z

b. Projects W and Z

c. Projects W and Y

Explanation:

CAPM equation : Expected return = Risk free rate + Beta x (Expected market return - Risk free rate)

W = 4% + [0.85 x (11% - 4%)] = 9.95%

X = 4% + (0.92 x 7%) = 10.44%

Y = 4% + (1.09 x 7%) = 11.63%

Z = 4% + (1.35 x 7%) = 13.45%

Projects Y and Z have an expected return greater than 11%

b. Projects W and Z should be accepted because its expected return is higher than the IRR

c. Project W would be incorrectly rejected because the expected rate of return is less than the overall cost of capital (i.e. 9.95 is less than 11). But its expected rate of return is greater than the IRR

Y would be incorrectly accepted because its expected rate of return is greater than the overall cost of capital but its expected rate of return is less than the IRR

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You were hired as a consultant to Quigley Company, whose target capital structure is 35% debt, 10% preferred, and 55% common equ

san4es73 [151]

Answer:

8.1%

Explanation:

Firstly, let look at the formula for calculating weighted average cost of capital (WACC):

WACC = (D/A) x r_D x (1-t) + (E/A) x r_E + (PE/A) x r_PE, where:

A: Market value of company asset;

D: Market value of company debt;

E: Market value of company equity;

PE: Market value of company preferred equity;

r_D: cost of debt;

r_E: cost of equity/retained earnings;

r_PE: cost of preferred equity;

t: tax rate

Putting all the numbers together, we have:

WACC = 35% x 6.5% x (1-25%) + 55% x 10.5% + 10% x 6% = 8.1%

8 0

2 years ago

Read 2 more answers

Emilee is the head of a large veterinary hospital. She takes care of many duties to keep the hospital up and running. That is wh

Lera25 [3.4K]

Answer:

The Human Resources (or ‘HR’) Management pathway focuses on the staff of a company. They work on planning, recruiting, hiring, training, safety, and overall employee development

Emilee have to worry about doing anything reltaed to that because she hired alonzo

8 0

2 years ago

RajDee Furniture Company (RFC) buys and sells office furniture. The company buys chairs from a manufacturer for $40 per unit. Or

skad [1K]

Answer:

(1) 2,28 units

(ii) 1,414 units

(iii) Minimum stock is less than EOQ.

Explanation:

(1) Units Ordered each time

$Economic\ order\ Quantity=\sqrt{\frac{2\times A\times O}{C} }$

where,

A = Annual Requirement =40,000 Units

O = Ordering Cost = $200 Per unit

Minimum Stock for lead time:

= (40,000 Units × 10) ÷ 365

= 1096 (Approximately)

C=Annual Carrying cost per unit = $40 × 10% × 1/2

= 2

$Economic\ order\ Quantity=\sqrt{\frac{2\times 40,000\times 200}{2} }$

= 2828 Units

(2) Average Inventory = EOQ ÷ 2

= 2828 Units ÷ 2

= 1,414 Units

(3) If the Lead time Increase 10 to 15 days:

Minimum Stock Need to be Maintained:

= Avg Daily Demand × Lead time

= (40,000 Units ÷ 365) × 15

= 1,644 Units

Minimum Stock is Less the EOQ , then Increasing Lead time to 15 Days Does not Have effect on EOQ.

8 0

2 years ago

Read 2 more answers

The Baldwin's workforce complement will grow by 20% (rounded to the nearest person) next year. Ignoring downsizing from automati

Arada [10]

Answer:

The correct answer is 84700

Explanation:

The Recruitment cost of the Baldwin's workforce can be calculated as follows. Total employee last year = 434+67= 501 Number of employees this year = 501*(1+10%) = 551 Increase in employee = 50 Amount spend on recruitment = 50*1694 = 84700 For every item, if your calendars are not exactly or equivalent to the first Shift Capacity, your labourers might be utilized on a first Shift.

Specialists are relegated to second move simply after the generation plan can't be met on first move. The level of specialists that left the organization a year ago, barring scaling back.

5 0

2 years ago

Candace owns a small business that is financially struggling. In order to respond to economic pressures, Candace is now obliged

Inessa [10]

Answer:

The answer is both: B) organizational change or competition over resources

Explanation:

Organizational change usually takes place due to external or internal pressures. In this specific case, Candace´s business is not doing well, probably her sales are down. We don´t know the reason why, I can guess probably more competition, but we know she must act fast.

Money is the most scarce resource of all. So if money is not flowing in like Candace would expect she must be able to make difficult decisions. Laying off a worker (out of how many?) is usually seen as a bad sign for the rest of the employees. Reducing labor days (Sundays) will probably also affect the rest of the employees negatively because they will simply work less hours and get paid less.

But the bottom line is Candace as the owner (probably also the manager) has to make the decisions that are necessary for her business to continue. It would always be worst for everyone involved (Candace and her employees) if they go out of business. That way everyone loses.

At this point Candace will need to communicate with her employees and let them know how bad the situation is and the necessary steps to be taken. Her actions will be unpopular but its her job to convince her employees that its for everyone´s best interest. Well, for everyone except the one employee already fired. Leaders must show up in difficult times and make tough choices.

4 0

2 years ago