Answer:
11.41%
Explanation:
Unlevered beta for new division:
= Levered beta ÷ [1 + (1 - tax) × D/E]
= 1.6 ÷ [1 + (1 - 40%) × (40 ÷ 60)
]
= 1.14
Beta for Faris's new division:
= Unlevered beta × [(1 + (1 - tax) × D/E]
= 1.14 × [1 + (1 - 40%) × (70 ÷ 30)]
= 2.74
Using CAPM,
Cost of equity, re = Rf + (beta × MRP)
= 8% + (2.74 × 5%)
= 21.71%
WACC:
= (wd × rd) + (we × re
)
= (70% × 7%) + (30% × 21.71%
)
= 11.41%
<u>Answer:</u>
The correct answer for this is: Gross Rent Multiplier.
<u>Explanation:</u>
The type of a simplified alternative to capitalization of net income that does not take into account bad debts or expenses is called Gross Rent Multiplier (GMR).
Gross Rent Multiplier is used to find the approximate net incomes that does not include any bad debts or expenses.
Also, it is considered as the quickest tool to estimate the values, such as of a building.
Answer: $2,845.57965
The principal to be deposited semiannually would be $2,845.58 (rounded to 2 decimal places)
Explanation:
Using compound formula below
A = p (1 + r/n)^nt
A =amount= $3,300
r = rate = 5% = 5/100 = 0.05
n = number of compounding rate (semiannually) =2 interest payments a year
t = time in years= 3
3,300 = p (1 + 0.05/2)^2(3)
3,300 = p (1 + 0.025)^6
3,300 = p (1.025)^6
3,300 = 1.15969342p
Divide both sided by 1.15969342
p = $(3,300/1.15969342)
p = $2,845.57965
p ≈$2,845.58 rounded to 2 decimal places.
Answer:
The Square Box should accept Project B only
Explanation:
Square Box should decide the project whose Net present value (NPV) of future cash inflow is higher than the initial cost of investment
NPV of cash inflow from Project A = 3,000/(1+12%)+7,000/(1+12%)^2+10,000/(1+12%)^3 = $15,377, lower then initial cost of $18,000 → deny Project A
NPV of cash inflow from Project B = 3,000/(1+12%)+7,000/(1+12%)^2+15,000/(1+12%)^3 = $18,936, higher then initial cost of $18,000 → accept Project B
