What would be the best choice for the max corporation

Assignment Help Business Economics
Reference no: EM13851919

Max Corporation has $10,000 in retained earnings that it has not distributed to its stockholders as dividends. It has a choice to invest the funds in a certificate of deposit at a bank at a guaranteed rate of 7 percent, or to plow back the funds in the expansion of its own operation.

If the expected return on the plowback is 12 percent, 10 percent 8 percent, or 6 percent, what would be the best choice for the Max Corporation?

If the stockholders are risk averse, and on average need a 2 percent compensation for assuming risk, what choices should the firm make?

Reference no: EM13851919

Questions Cloud

Find much information about the keynesian model : Confused and cannot find much information about the Keynesian model? According to the Keynesian model, what are the two components of consumption spending? What factors determine how consumption changes when real disposable income changes?
Expressions for entropy change : 1.) Derive the cat constant temperature, constant volume and constant pressure.  Note: These are three separate expressions.
Two commodities and a consumer prefers : Suppose that there are two commodities and a consumer prefers more to less of each good. If the consumer has transitive preferences, can her indifference curves cross?
What is the price elasticity of demand for labor : When the wage rate rose from $6.25 per hour to $6.75 per hour, employment in Fast food, Inc. fell from 5,100 to 4,900. What is the price elasticity of demand for labor?
What would be the best choice for the max corporation : Max Corporation has $10,000 in retained earnings that it has not distributed to its stockholders as dividends. It has a choice to invest the funds in a certificate of deposit at a bank at a guaranteed rate of 7 percent, or to plow back the funds in t..
Recursion in binary search trees : Assignment is intended to give you practice writing recursive code that traverses a common computer programing structure: a binary search tree.
Standby tickets cover average costs of extra passengers : Leopold Bus Company runs daily service between Bigcity and Tinytown. It calculates that the average cost per trip (wages, gas, insurance, payments on loans, etc.) is $140. Leopold sells the bus tickets for $5 each. Will the sales of the standby ticke..
Texaco provides labor-management training : 1. What do these new supervisors need to know about labor relations and the collective bargaining process
Calculate the concentration of all ions : Problem: Calculate the concentration of all ions present in each of the following solutions of strong electrolytes.

Reviews

Write a Review

 

Business Economics Questions & Answers

  Problems consider a market containing four identical firms

For all problems consider a market containing four identical firms, each of which makes an identical product. The inverse demand for this product is P = 100?Q, where P is price and Q is aggregate output. The production costs for firms 1, 2, and 3 are..

  Airlines announced a new round of fare discounts

Delta and Southwest Airlines announced a new round of fare discounts. In response Sangita Woerner, Vice President of Marketing at Alaska Airlines, said, “It’s unlikely that we will match these fare reductions because we do not anticipate any negative..

  What is the equilibrium quantity

What would be the equilibrium price?  What is the equilibrium quantity?

  What you think is less standing in line for pregnant women

What do you think it resulted in less standing in line by pregnant women. Do you suppose and women became pregnant in prder to cut into the long lines.

  Elucidate your response and show any movements in ppf

World Trade Center and Pentagon affected short and/or long-term productivity in United States. Elucidate your response and show any movements in PPF.

  Factor of production-labor theory of value is basis of cost

If a nation has an open economy, it means that the nation: In Adam Smith's trade model, labor is the only factor of production and the labor theory of value is the basis for cost. According to Smith's trade model in a two-nation, two-product world, a..

  Why does government mandate individuals to purchase

Why does government mandate individuals to purchase their own insurance in some cases such as automobile liability insurance but directly provide insurance to people in or situations such as health insurance.

  Constant debt equity ratio maintained

The expansion will cost $60 million and will be financed with $40 million in new debt initially with a constant debt equity ratio maintained thereafter.

  At any given interest rate consumers decide to save more

A any given interest rate, business become very optimistic about the future profitability of investment spending. Assume the budget balance is zero.

  Elucidate how far can the stock price move

Illustrate what is the most money you can make on this position. Elucidate how far can the stock price move in either direction before you lose money.

  What way the us trucking industry exemplified the capture

what way the U.S trucking industry exemplified the capture theory hypothesis of government regulation prior to the capture theory hypothesis of government regulation prior to the passage of the Motor Carrier Act of 1980

  Describe three of the key problems that friedman identifies

What does Friedman mean when he says the Earth is becomming "hot, flat, and crowded?" Describe three of the key problems that Friedman identifies in the book and explin why they re important.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd