Solution-Question regarding the firms operating risk

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%?

User Account

All Pages

Question regarding the firms operating risk

Reference no: EM131100993

Reference no: EM131100993

Questions Cloud

Reviews

Write a Review

Finance Basics Questions & Answers

Financial reporting and analysis

A report on financial accounting

Describe the types of financial ratios

Differences between sole proprietorship and corporation

Prepare a cash budget statement

What are the implied interest rates

State pricing theory and no-arbitrage pricing theory

Small business administration

Effect of financial leverage

Evaluate the basis for the payment to the lender

Importance of opps, ipps, mpfs and dmepos

Time value of money

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT