If a typical U.S. company correctly estimates its WACC at a given point in time and then uses that same cost of capital to evaluate all projects for the next 10 years, then the firm will most likely

Answers

Answer 1

Available Options Are:

A. Become riskier over time, but its intrinsic value will be maximized.

B. Become less risky over time, and this will maximize its intrinsic value.

C. Accept too many low-risk projects and too few high-risk projects.

D. Become more risky and also have an increasing WACC. Its intrinsic value will not be maximized.

E. Continue as before, because there is no reason to expect its risk position or value to change over time as a result of its use of a single cost of capital.

Answer:

Option D. Become more risky and also have an increasing WACC. Its intrinsic value will not be maximized.

Explanation:

The reason is that different projects require different level of funding. If we are not increasing Debt and Equity at the same proportion for funding all the projects then we are actually increasing our WACC which means that the acceptability of the projects will not be appropriate here. The risk profile of all individual projects also matter because we use Ke cost of equity to calculate the WACC, which is calculated using the CAPM formula. And Beta Asset is the risk of the individual project industry which is used in the CAPM formula. All this increases the WACC which shows that the risk profile of the company has grown upwards.

Furthermore, if the WACC is higher then the intrinsic value of the projects can not be maximized and that's the reason why most firms try to have optimal level of capital structure (Percentage of equity and debt that gives lowest WACC).

Hence the option D is correct.


Related Questions

Nations will be able to produce a larger joint output and realize mutual gains when each specializes in the production of those items for which it is a low-opportunity cost producer and trades for those things that it could produce only at a high cost. This statement best describes the

Answers

Answer:

law of comparative advantage.

Explanation:

Nations will be able to produce a larger joint output and realize mutual gains when each specializes in the production of those items for which it is a low-opportunity cost producer and trades for those things that it could produce only at a high cost. This statement best describes the law of comparative advantage.

Comparative advantage can be defined as ability of a country or business entity to produce goods and services at a lower opportunity cost than others such as their trade partners. Hence, the most important benefit of the comparative advantage is that, it gives a country or business entity the ability to sell their finished goods and services at a lower price in comparison with its close competitors and consequently, resulting in a stronger sales margins.

Which of the following is an owner of a fee simple absolute NOT able to do...? Lease the property to another Pledge the property as security of a debt Build beyond the property line of the land Grant an easement

Answers

Answer:

Correct Answer:

4. Build beyond the property line of the land

Explanation:

Fee simple absolute is an estate in land, which is a form of freehold ownership. It is a way that real estate and land may be owned in common-law countries. And, also is the highest possible ownership interest that can be held in real property.

James has $1500 to open a checking account. He can maintain a monthly balance of at least $1000. He plans to use the ATM four times per month at his local branch. He does not overdraft his account and plans to use direct deposit. He also plans to pay his bills online and he averages 8 bills per month. Bank Account Terms and Conditions Bank Account terms and conditions. Bank A is best for James. James wants an account with the lowest fees. Which checking account would be best for James? Account A Account B Account C Account D

Answers

Answer: Account A

Explanation:

Account A would be best for James as it provides the most value for the things he would like to do.

ATM charges are free with this account so he can use the ATM four times in the month at no chargeHe would pay no monthly fees as he uses direct debitHe would pay an annual fee of $0And as online payments are free, he would not have to worry about getting charged for the 8 bills to process in the month.

Answer:

account a

Explanation:

Alaska king crab fishing in the 1960s and 70s was a dangerous but rich fishery. Boats from as far away as California and Japan braved treacherous waters to reach the abundant king crab beds in Cook Inlet and Bristol Bay, major waters along the southern Alaska coast. In the early 1980s, the fishery crashed due to overfishing. All crabbing in those areas ended. To this day, there is no crabbing in Bristol Bay or Cook Inlet. a. How would an economist explain the decline of the Alaska king crab fishery

Answers

Answer:

Common good

Explanation:

The decline of the Alaska king crab fishery would be explained using the concept of common good.

Now to provide further explanation on what a common good is:

A common good is a good that is beneficial to all persons. Such a good serves everybody as there is no exclusion or rivalry. One major problem with common goods are a depletion of resources. This is what happened when the fishery crashed due to fishery because everyone is entitled to it and uses it, the problem of overfishing was bound to happen.

The teams working at Dixon Corp. are allowed to give their suggestions to the top management regarding the workflow and new product designs. The teams are, however, not authorized to make any management decisions and also do not have a say in the kind of projects the company accepts. These teams are an example of a(n) .

Answers

Answer:

employee involvement team

Explanation:

Employee involvement refers to the direct participation of staff by application of their ideas, expertise, and efforts, towards solving problems and in decision making to help their organizations fulfil its mission or meet its objectives. Although the team members are allowed to give suggestions, they are not authorized to make decisions in the managerial capacity.

Some advantages of using employee involvement are:

improved decision making by the organizations

improved attitudes  regarding work

increased employee productivity

increased job satisfaction, because the employees feel like they are being heard.

Cherries on Top, a national ice cream shop, is struggling financially to keep up with the bigger chains. The top executives have decided to close all the stores in the Northeast and Texas, as that will give them an additional one million dollars to put into marketing. This executive is practicing the

Answers

Answer:

utilitarian approach.

Explanation:

Cherries on Top is a national ice cream shop and is struggling financially to keep up with the bigger chains. The top executives have decided to close all the stores in the Northeast and Texas, as that will give them an additional one million dollars to put into marketing. This executive is practicing the utilitarian approach.

Utilitarianism can be defined as an ethical moral theory that offers anyone a relatively direct method for enhancing choices and making decisions about the right course of action for any particular situation.

Basically, the utilitarian approach analyzes and measure an action in terms of its outcome or consequences; by determining the net benefits and costs to all stakeholders of an organization individually.

The main purpose or focus of the utilitarian approach is to achieve the best possible outcome or results for the overall success of the business while creating the least amount of harm, loss, damage or suffering.

Hence, the executive of Cherries on Top is practicing the utilitarian approach.

Conversion costs include​ ________. A. direct labor and manufacturing overhead costs B. direct material and direct labor costs C. product and period costs D. direct​ material, direct​ labor, and manufacturing overhead costs

Answers

Answer:

A. direct labor and manufacturing overhead costs.

Explanation:

In Financial accounting, conversion costs comprises of all the costs associated with the conversion of raw materials into finished goods or products. These costs are usually calculated by the addition of direct labor and manufacturing overhead.

Hence, conversion costs include​ direct labor and manufacturing overhead costs.

You are the manager who employs a participantive control approach. You have concluded that corrective action is necessary to improve customer satisfaction, but first you need to convince your employees that the problem exists. What kind of evidence do you think employees will find more compelling; quantitative measurements or anccdotes from your interactions with customers

Answers

Answer:

Quantitative measurements

Explanation:

A participative approach in management involves involving employees in decision making processes in the organization. This is a transparent approach that allows for effective communication between managers and employees.

In the above case, quantitative measurements will better convince employees because this would better provide an objective evidence to show that corrective actions work better in improving customer satisfaction. Anecdotes in comparison would merely be hearsay accounts and won't be taken seriously by employees

B2B markets differ from B2C markets because: Group of answer choices salespeople personally call on business customers to a far greater extent than they do consumers. many more products are sold in B2C markets than B2B. business products are often much less complex than consumer products. B2C transactions occur prior to B2B transactions. there are fewer B2B transactions resulting in smaller dollar amounts.

Answers

Answer:

salespeople personally call on business customers to a far greater extent than they do consumers.

Explanation:

Business to business (B2B) markets differ from Business to consumers (B2C) markets because salespeople personally call on business customers to a far greater extent than they do consumers.

Under the B2B sells its products directly to other businesses such as wholesalers or retailers and not the end consumers.

On the other hand, the B2C market involves businesses selling their goods and services directly to the end consumers or users for personal use.

A store that advertises a buy-one-get-one-free sale is

Answers

Answer:

sales promotions

Explanation:

Sales promotions are the steps taken to increase the purchase of the products by adding an incentive to the customers. Buy-one-get-one-free is one of the sales promotions. Here two products are sold in the cost of one. The customer is provided with the benefit of getting two products by giving the amount of one. It is the promotions in which quantity plays a crucial role.

Answer:

sales-oriented

Explanation:

I just got it right.

Depreciation is the accountant's estimate of the cost of ______ used in the production process matched with the benefits produced from owning it.

Answers

Answer:

Fixed assets and equipment

Explanation:

Depreciation is the accountant's estimate of the cost of fixed assets and equipment used in the production process matched with the benefits produced from owning it.

It is the decrease in the value of assets and the method used to reallocate the cost of asset over its useful life span.

Assets can be categorized as :

1. Current

2. Fixed

3. Tangible

4. Intangible assets.

In accounting, there are several standard methods of computing depreciation expense:

1. Fixed percentage

2. Straight line

3. Declining balance methods.

Cart Co. purchased an office building and the land on which it is located for $750,000 cash and an existing $250,000 mortgage. For realty tax purposes, the property is assessed at $960,000, 60% of which is allocated to the building. At what amount should Cart record the building

Answers

Answer:

$600,000

Explanation:

The computation of the amount to be recorded for the building is shown below:

But first we have to determine the total acquisition cost of land which is as follows

= Cash + mortgage

= $750,000 + $250,000

= $1,000,000

Now it is mentioned that 60% is allocated to the building

So, it would be

= $1,000,000 × 60%

= $600,000

Kate's Diner offers one breakfast item, a breakfast special. The market price for this meal is $5. At her profit-maximizing level of output, Kate's average variable cost is $4 per meal. Her average total cost is $6 per meal. Since the market is perfectly competitive, Kate should ________.

Answers

Answer:

keep producing in the short run but exit the industry or go out of business in the long run

Explanation:

A perfect competition is characterised by many buyers and sellers of homogeneous goods and services. Market prices are set by the forces of demand and supply. There are no barriers to entry or exit of firms into the industry.  

In the long run, firms earn zero economic profit.  If in the short run firms are earning economic profit, in the long run firms would enter into the industry. This would drive economic profit to zero.  

Also, if in the short run, firms are earning economic loss, in the long run, firms would exit the industry until economic profit falls to zero.  

A firm should shut down in the short run if price is less than average variable cost. But since the diner's price is greater than average variable cost, it should continue production.

A firm should exit the industry in the long run if price is less than average total cost. the diner's price is less than average total cost, so it should shut down in the long run

A trial balance is a(n)______of accounts and their balances at a point in time and is used to confirm that the sum of debit account balances equals the sum of_____account balances.

Answers

Answer:

List; credit.

Explanation:

A trial balance is a list of accounts and their balances at a point in time and is used to confirm that the sum of debit account balances equals the sum of credit account balances. It is used in a double-entry account book to record all debit and credit in order to detect any error, if there is a disagreement between the figures.

In Financial accounting, there are basically three (3) types of trial balance and these are;

1. Adjusted trial balance.

2. Unadjusted trial balance.

3. Post-closing trial balance.

Generally, the trial balance should list accounts in the following order for ease of preparation of the financial statements or statements of account; asset, liability, equity, revenue and expenses.

A producer in another state wants to become a producer in Louisiana. The other state gives the same privileges to Louisiana producers wanting to be licensed in that state as it does to its own producers. Louisiana, therefore, extends the licensing privileges to the prospective producer of the other state. What is this called?

Answers

Answer:

Reciprocity.

Explanation:

In this scenario, a producer in another state wants to become a producer in Louisiana. The other state gives the same privileges to Louisiana producers wanting to be licensed in that state as it does to its own producers. Louisiana, therefore, extends the licensing privileges to the prospective producer of the other state. This is called reciprocity because the state in which the individual (producer) resides accords him or her the same privilege to other individuals (producers) who are residing in Louisiana for fairness and equity.

A document you are working on is ready for declassification. You have checked with the OCA responsible and the declassification date has not changed. How will the banner markings on the document change?

Answers

Answer:

All banner markings will be lined through. The document will be marked DECLASSIFIED at top and bottom

Explanation:

In the declassification process documents that used to be classified as secret stop being so and are made available to the public. In this process, the banner markings on the document will be lined through and the document itself will be marked as DECLASSIFIED at the top and bottom of the page. Thus stating that it was previously a CLASSIFIED document that is freely available.

Byron Company records several adjusting entries for accrued expenses at the end of each month. The adjusting entry for each of Byron's accrued expenses is a(n): Multiple Choice Increase an expense; decrease a liability. Increase an expense; decrease an asset.

Answers

Answer: Increase an expense

Explanation:

Accrued expenses are those expenses that the company has already incurred but have not yet paid for. Even though they have not paid for this, they will still have to account for it due to the Accrual basis in Accounting that requires that expenses are recognised when incurred not when paid.

The adjusting entry for an accrued expense is therefore to increase (by debiting) the relevant expense account and then increase (by crediting) the relevant liability account.

A company completes construction of a $400 million offshore oil platform and places it into service on January 1. State law requires that the platform be dismantled and removed at the end of its useful life, which is estimated to be 10 years. The company estimates that the cost of dismantling the platform will be $20 million. The discounted value of the liability is $9 million using the company's credit-adjusted, risk-free rate. The company has already capitalized the $400 million construction cost of the platform. What amounts should the company record as liability and expense when the asset is placed into service

Answers

Answer:

b. Liability, $9,000,000; expense, $0.

Explanation:

An asset retirement obligation (ARO) refers to an obligation with respect to the acquisition , construction, development, etc. The liability should be recognized the liability at the present value that should be expected to be paid for settling the obligations

Here the $9,000,000 million represents the liability

Also the journal entry is

Asset Dr

        To liability

(Being the asset placed is recorded)

There is no expense should be recorded in the income statement

As a human resource manager, Janese commits 5% of the annual budget toward instituting new programs that reward employees for effectively handling diversity. Janese is playing the role of a(n)

Answers

Answer:

Entrepreneur

Explanation:

An entrepreneur can be defined as an individual that sets up a business and takes financial risk, with the aim to make profit.

It can also be simply defined as an individual that sets up and takes financial decisions for a business with the aim of making profit.

In the question above, Janese is making financial decisions for every employee and as such can be called an entrepreneur.

Cheers.

It is the custom for paper mills located alongside the Layzee River to discharge waste products into the river. As a result, operators of hydroelectric power-generating plants downstream along the river find that they must clean up the river's water before it flows through their equipment.
If the government intervenes and corrects the externality in the situation described above, we would expect
a) the output of the paper mills to increase.
b) the price of paper from the mills to decrease.
c) production of the hydroelectric power plants to decrease.
d) production in the paper mills to decrease.

Answers

Answer: d. Production in the paper mills to decrease

Explanation:

Since they have been mandated to treat the water that is at their disposal, they have to do it. But what happens here is there would be a down time in production as some of the workers who are supposed to be carrying out their duty in the production site would be instructed to first clean the water that they have been instructed, this would lead to production in paper Mills to decrease.

Parker enters into a contract with seller Derrick to buy his home. Before finalizing the sale, Parker has a change of heart and decides to renounce all worldly possessions. He no longer wants to buy Derrick’s home, but his brother, Tom, agrees to take Parker’s place as the buyer in the purchase contract. This is an example of ______.

Answers

Answer: Novation

Explanation:

Novation agreement is defined as replacing an obligation with another or allowing a new party into a deal replacing an existing one, parties involved in new agreement has to sign this to agreement. The party brought in new was not part of the initial deal.

Mark, a real estate broker, teamed up with Chris, another real estate broker, in an effort to not do business with a cross-town broker. What may Mark and Chris be accused of...? Self Dealing Vicarious Liability Group Boycotting Price Fixing

Answers

Answer:

Group Boycotting.

Explanation:

In this scenario, Mark, a real estate broker, teamed up with Chris, another real estate broker, in an effort to not do business with a cross-town broker. Hence, Mark and Chris be accused of Group Boycotting.

Group Boycotting can be defined as the process of having two or more parties (competitors) come together and reach an agreement not to do business with their close rivals in the same industry. A group boycott is a violation of antitrust law because the conspiring parties refuse to do business with another for their selfish interests or ulterior motives.

With the emergence of smartphones, users no longer have to carry a separate music player, a video game, a laptop, or a magazine to keep themselves entertained when traveling. A smartphone is loaded with a variety of applications to satisfy all the customer needs that different industries or products individually satisfied earlier. As a result, the smartphone industry has been posing a threat to a lot of other unrelated industries. What is this phenomenon best known as

Answers

Answer: Industry Convergence

Explanation: Industry Convergence has been boosted by the increased leverage of science and technology to various industries which has seen many industries break from the traditional single market focus and transition in a more robust cross industry focus whereby industries can incorporate several individual product into its production plan thereby providing more value added product and services. Smartphone companies as described above have integrated several single market products such as radio, music player, gaming, internet connectivity, camera and video recording, flash light(torch) and so on. thereby creating a robust and cross-industry product which adds more value and products able to withstand competition.

Assume that you plan to buy a share of XYZ stock today and to hold it for 2 years. Your expectations are that you will not receive a dividend at the end of Year 1, but you will receive a dividend of $9.25 at the end of Year 2. In addition, you expect to sell the stock for $150 at the end of Year 2. If your expected rate of return is 16 percent, how much should you be willing to pay for this stock today?

Answers

Answer:

Price to be paid today = $118.35

Explanation:

The price of a share can be calculated using the dividend valuation model  

According to this model the value of share is equal to the sum of the present values of its future cash dividends discounted at the required rate of return.  

The model can applied as follows:

PV of dividend = D×(1+r) ^(-n)

D- dividend , r - required rate , n- number of year

D- 9.25,  r - 16%, n = 2

PV of dividend = 9.25 × (1.16)^(-2)= 6.9

PV of disposal value

PV of dividend = F ×  (1+r) ^(-n)

D- disposal value  , r - required rate , n- number of year

PV of disposal value  = 150 × (1.16)^(-2)= 111.47

Price to be paid today

Total present value  =  6.9  +  111.47  = 118.35

Price to be paid today = $118.35

The reserve requirement is​ 10%. Suppose that the Fed ​$ worth of U.S. government securities a bond​ dealer, electronically the​ dealer's deposit account at Reliable Bank. Which of the following correctly describes the immediate effect of this​ transaction? A. The total reserves of Reliable Bank by ​$. B. The excess reserves of Reliable Bank by ​$. C. The required reserves of Reliable Bank by ​$. D. Reliable Bank

Answers

Answer:

D. The money supply decreases by ​$150,000.

Explanation:

Note: This question is not complete as some figures are omitted. The full question is therefore presented first before answering the question as follows:

The reserve requirement is​ 10%.

Suppose that the Fed sells ​$150,000 worth of U.S. government securities from a bond​ dealer, electronically debiting the​ dealer's deposit account at Reliable Bank.

Which of the following correctly describes the immediate effect of this transaction on the money​ supply?

A. The money supply decreases by ​$1,500,000

B. The money supply decreases by ​$135,000.

C. There is no change in the money supply.

D. The money supply decreases by ​$150,000.

E. None of the above.

The explanation to the answer is now provided as follows:

This is an example of Open market operations (OMO).

Open market operations (OMO) is a monetary policy strategy in which the central bank such as the Federal Reserve sells or purchases government securities in order to implement a particular monetary policy.

When the central bank sells government securities on the open market, it aims to reduce the money supply by the worth of the securities. This is called a contractionary monetary policy.

On the other hand, when the central bank purchases government securities on the open market, it aims to increase the money supply by the worh of the government securities. This is called an expansionary monetary policy.

From the question, the sale of ​$150,000 worth of U.S. government securities from a bond​ dealer is a contractionary monetary policy and it will reduce the money supply by exactly $150,000.

Therefore, the correct option is D. The money supply decreases by ​$150,000.

"A prospective customer has been solicited by a registered representative, and prior to opening an account, the customer wishes to check on the disciplinary background of that registered representative. Which statement is TRUE?"

Answers

Explanation:

i love Kayla it the ture statement

Which of the following applies most generally to supply in the long run? Group of answer choices All original producers will leave the market. Producers are only able to make change in their variable factors of production. Average total cost must decline. Producers are able to make change in all their factors of production.

Answers

Answer:

Producers are able to make change in all their factors of production.

Explanation:

The long run is a period when all factors of production are variable bot fixed and variable factors of production.

In the long run, firms that are earning losses would exit the industry.

"Institutional portfolio managers have been allocating an increasing percentage of their funds to common stock positions. This is an indication that their market sentiment is:"

Answers

Answer: Bullish

Explanation:

A Bullish market is characterized by increasing economic output and therefore rising market prices for stocks. The mood in the market is optimistic which will keep the stock prices rising.

Institutional portfolio managers will therefore start allocating and increasing the proportion of their funds in common stock positions to take advantage of this better performing stock market and make a healthy return.

You have been assigned to research behaviors related to various reactions to different types of media. The one firm directive you have been given is that you must observe the subjects in their natural settings. Which of the following is TRUE about the research you will be conducting?a. It must not include either qualitative or quantitative methods. b. It must include quantitative methods. c. It must include both qualitative and quantitative methods. d. It must include qualitative methods.

Answers

Answer:

c. It must include both qualitative and quantitative methods.

Explanation:

For the research of behaviors related to various reactions to different types of media, I will consider both qualitative and quantitative methods.

Qualitative and quantitative methods together provide more comprehensive results of the research. Qualitative methods give the quality of the media type and quantitative methods will give quantitative data such as how many people are using the particular media type and for how much time.

Hence, the correct answer is " c. It must include both qualitative and quantitative methods."

Cash sales are normally 25% of total sales and all credit sales are expected to be collected in the month following the date of sale. The total amount of cash expected to be received from customers in September is:

Answers

Answer:

The total amount of cash expected to be received from customers in September is the sum of 25% of the September sales plus 75% of the August sales.

Explanation:

Other Questions
A random number generator chooses 2 numbers between 1 and 5. This table demonstrates all possible outcomes. 1 2 3 4 5 1, 1 1, 2 1, 3 1, 4 1, 5 2 2, 1 2, 2 2, 3 2, 4 2, 5 3 3, 1 3, 2 3, 3 3, 4 3, 5 4 4, 1 4, 2 4, 3 4, 4 4, 5 5 5, 1 5, 2 5, 3 5, 4 5, 5 What is the probability that the computer will pick two 5s? The size of a television screen is given as 95 cm, correct to the nearest 5 cm.Write down the upper bound of the size of the television screen. The lungs areto the heart.O AnteriorO DistalLateralSuperior Find the distance between the points. Give an exact answer and an approximation to three decimal places.TI(S.(3.1, 0.3) and (2.7, -4.9)Th(Rd A string is stretched and fixed at both ends, 200 cm apart. If the density of the string is 0.015 g/cm, and its tension is 600 N, what is the fundamental frequency x/5=-2 . And how did you get it? During which stage of cellular respiration is glucose broken down into two molecules of pyruvic acid? Musah stands at the center of a rectangular field.He takes 50 steps north,then 25 steps West and finally 50 on a bearing of 315. Sketch Musah's movement How far west is Musah's final point from the center? How far north is Musah's final point from the center? . The animal which used to Graze freely in the Prairies was Bison. yes no B9 takes a throw-in, which his goalkeeper, B1, traps with his feet. B1 then dribbles the ball into the penalty area and picks it up with his hands in order to punt the ball. The officials should Solve for y.-1 = 8+3ySimplify you answer as much as possible. A current of 5 A is flowing in a 20 mH inductor. The energy stored in the magnetic field of this inductor is:_______a. 1J. b. 0.50J. c. 0.25J. d. 0. e. dependent upon the resistance of the inductor. A triangle has one side that lies along the line y=1/4x and another that lies along the line y=-1/4x. Which of the following points could be a vertex of the triangle? The amounts of protein and energy needed per kilogram of body weight _____, whereas the total amount of protein and energy needed _____ as children grow into adulthood. In training to run a half marathon, Jenny ran 2/5 hours on Tuesday, 11/6 hours onThursday, and 21/15 hours on Saturday. What is the total amount of hours that Jennyran this week? (Simplify your answer and state it as a mixed number.)I Please help me on this question What does the term Cold War refer to? Determine whether the following statement about reaction rates is true or false. If the statement is false, select the reason why. Increasing the temperature of a reaction system decreases the activation energy of the reaction. A. TrueB. False A candy store sells only one type of candy, which comes in different colors. Each color is a different flavor, and some flavors cost more than others. Specifically, 1 red piece costs the same as 3 blue pieces, 2 orange pieces cost the same as 5 green pieces, and 2 blue pieces cost the same as 10 green pieces. If 1 orange piece costs 13 cents, how much will 8 red pieces cost? You have an option on an ARM that has a two-year adjustment interval, 4% margin, 2% periodic rate cap and a 6% lifetime cap. The current initial rate is 5.35%. You can also get a 30-year, fixed-rate mortgage for 6.65%. You plan on staying in this home for at least 10 years. What would be your best choice?