Using the risk-adjusted discount rate approach

Assignment Help Financial Management
Reference no: EM13948543

Using the risk-adjusted discount rate approach, the firm's weighted average cost of capital is applied to projects with: Select one: a. no risk b. low risk c. normal risk d. high risk

Reference no: EM13948543

Questions Cloud

Fixed rate of interest for five years : Company X is based in the United Kingdom and would like to borrow $50 million at a fixed rate of interest for five years in U.S. funds. Because the company is not well known in the United States, this has proved to be impossible. Suggest an appropria..
A project that carries normal amount of risk : A project that carries a normal amount of risk and does not affect the risk exposure of the firm should be discounted back at the: Select one: a. coefficient of variation b. beta c. risk-free rate d. weighted average cost of capital
If market interest rates rises : If market interest rates rises?
Maintain growth rate-what must the dividend payout ratio be : Frasier Cabinets wants to maintain a growth rate of 5 percent without incurring any additional equity financing. The firm maintains a constant debt-equity ratio of .55, a total asset turnover ratio of 1.30, and a profit margin of 9 percent. What must..
Using the risk-adjusted discount rate approach : Using the risk-adjusted discount rate approach, the firm's weighted average cost of capital is applied to projects with: Select one: a. no risk b. low risk c. normal risk d. high risk
Rise for the option strategy to be more profitable : The current price of a stock is $84, and three-month European call options with a strike price of $85 currently sell for $4.20. An investor who feels that the price of the stock will increase is trying to decide between buying 100 shares and buying 2..
What is the cash flow in year two of the project : A potential project requires the purchase of $612,000 of equipment. The equipment will be depreciated straight-line to a zero book value over the three-year life of the project. Net working capital equal to 25 percent of sales will be required to sup..
What is the net present value at the required rate of return : Gateway Communications is considering a project with an initial fixed asset cost of $2.872 million which will be depreciated straight-line to a zero book value over the 10-year life of the project. At the end of the project the equipment will be sold..
Facing the capital budgeting proposal : Suppose you are facing the following capital budgeting proposal: $100,000 initial cost, to be depreciated straight-line over 5 years to an expected salvage value of $ 5000, 35% tax rate, $45,000 additional revenues for the first year and it is growin..

Reviews

Write a Review

Financial Management Questions & Answers

  Disadvantages of investing in stocks and bonds

What are some of the advantages and disadvantages of investing in stocks and bonds? Which investment (stocks or bonds) best fits with your current financial situation?

  Suppose you bought bond with an annual coupon rate

Suppose you bought a bond with an annual coupon rate of 7.2 percent one year ago for $945. The bond sells for $990 today. Assuming a $1,000 face value, what was your total dollar return on this investment over the past year? What was your total nomin..

  What is the approximate size of the mortgage

Your real estate agent mentions that homes in your price range require a payment of approximately $1,200 per month for 30 years at 12% (APR) interest. The first payment will be made at the end of the third year (month 36), and the total number of pay..

  Disbursement account

Which one of the following is a disbursement account into which funds are transferred from a master account only as the funds are needed to cover checks presented for payment?

  How much can it afford to pay for this machine

A corporation is considering purchasing a machine that will save $150,000 per year before taxes. The cost of operating the machine (including maintenance) is $30,000 per year. The machine will be needed for five years, after which it will have a zero..

  Capital structure-weighted average cost of capital

What is the Acme Company’s weighted average cost of capital if its cost of before-tax debt is 8% (20% of overall capital structure), its cost of preferred stock is 9.5% (20% of capital structure) and is cost of internal equity is 15.5% (60% of the ca..

  Projected liabilities and owners equity

When projected assets are more than projected liabilities and owners’ equity, the plug will be

  Assessing the value of customer relationship

assessing the value of customer relationship managementtrevor toy auto mechanics is an automobile repair shop in

  About the retirement plan

You are considering your retirement, and would like to have accumulated $1,839,829 by the time you retire in 27 years. If you anticipate that your average compounded rate of return over the 27 years until retirement will be 12%, how much will you nee..

  The debt value of operating leases

Taco Shell Inc. is a restaurant with operating lease commitments of $30 million a year for the next 8 years. It has a cost of capital of 8%, a cost of equity of 10%, a pre-­-tax cost of debt of 4% and an after-­-tax cost of debt of 2.5%. Which of the..

  Lesser responsibility for maintaining ethical corporate

Does the financial manager have a greater responsibility or a lesser responsibility for maintaining ethical corporate governance? Why or why not? What is your approach to ethical corporate governance?

  Bonds bears the greatest risk for a bondholder

Which of the following bonds bears the greatest risk for a bondholder? A. 5% coupon;10 years to maturity B. 5% coupon; 15 to years maturity C. 7% coupon; 10 years to maturity D. 7% coupon; 15years to maturity

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