User Account

All Pages

Question regarding the firms operating risk

Assignment Help Finance Basics
Reference no: EM131100993

A firm with $ 1,000,000 in assets and 50% debt in its capital structure is considering a $ 250,000 project. The firms after tax weighted average cost of capital is 10.4% the marginal cost of debt is 8% ( before taxes) and the marginal tax rate is 40%. If the project does not change the firms operating risk and is financed exclusively with new equity, what rate of return must it earn to be acceptable?

Reference no: EM131100993

Questions Cloud

The appropriate null and alternative hypotheses : Starting in 2008 an increasing number of people found themselves facing mortgages that were worth more than the value of their homes.
Prove that the shannon expansion theorem : E15: Fundamentals of Digital Systems - Fall 2010 - HOMEWORK 5. Prove that the Shannon expansion theorem works for any Boolean function expressed as sum of product terms
Gs stock with a strike price : The current risk-free rate is 0.3% per month. What is the price of a 3-month put on GS stock with a strike price of $30 (put-call parity)
Design a non-inverting amplifier with a nominal gain : Assume the op amp has a finite gain but is otherwise ideal.
Question regarding the firms operating risk : If the project does not change the firms operating risk and is financed exclusively with new equity, what rate of return must it earn to be acceptable?
What is the actual voltage gain : Suppose the circuit is designed for a nominal gain of 2.00 but the R1 and R2 suffer from a mismatch of 5% (i.e., R1 = (1 ±0:05) R2). What is the actual voltage gain?
A rate described by the exponential density : Suppose you are watching a radioactive source that emits particles at a rate described by the exponential density f (t) = ?e-?t , where ? = 1, so that the probability P (0, T ) that a particle will appear in the next T seconds is P ([0, T ]) = { T ?e..
How is preferred stock similar to bonds : How is preferred stock similar to bonds? Dividend payments to preferred shareholders (much like bond interest payments to bondholders) are tax deductible. Investors can sue the firm if preferred dividend payments are not paid (much like bondholder..
Cryptons cost of capital : Dividends have grown at the rate of 5.1% per year and are expected to continue to do so for the foreseeable future. What is Crypton's cost of capital where the firm's rate is 30%?

Reviews

Write a Review

Finance Basics Questions & Answers

  Future value of annuity problem

You deposit $10,000 into a retirement account at the end of the next 10 years earning 9% interest, what is the future value of your retirement after 10 years?

  On january 1 20d a company issued 5 million of 10-year

on january 1 20d a company issued 5 million of 10-year bonds at a 10 stated interest rate to be paid semiannually. the

  Mergers and acquisition-sample question

Describe your views on mergers and acquisitions (M&As). Analyze the related issues and implications both from perspective of managers and investors.

  Importance of financial information in hcos and its function

The importance of financial information in HCOs and its functions

  Sampp one of three major credit rating institutions

sampp one of three major credit rating institutions downgraded the u.s. credit rating from aaa highest possible to aa

  Calculating irr - consider two streams of cash flows a and

calculating irr - consider two streams of cash flows a and b. stream as first cash flow is 8900 and is received three

  You short sold 350 shares of stock at a price of 40 and an

you short sold 350 shares of stock at a price of 40 and an initial margin of 75 percent. if the maintenance margin is

  Do you expect that ventures will be the major source of

discussion questionsdo you expect that ventures will be the major source of innovations in products and services in the

  Estimate the value of the option to develop the property

estimate the value of the option to develop the property.(hint:Make any assumptions you must to arrive at an estimate)

  What is the present worth of the motor

If the installed cost of the motor is $3,500, what is the present worth of the motor over a 10 year period when the MARR is 15% per year?

  What must the expected return on the market be

A stock has an expected return of 11.7 percent, its beta is 0.92, and the risk-free rate is 5.85 percent.

  Identify the role of the health care manager

Write a 700- to 1,050-word paper in which you identify the role of the health care manager and compare productive and nonproductive time. Consider the following:

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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