What discount rate should florida use

Assignment Help Accounting Basics
Reference no: EM133125010

Question - Florida Corp. is calculating the appropriate rate for discounting cash flows on a project valued using the APV method. Florida's target debt ratio (D/(D+E)) in market value terms is 50%, and the yield-to-maturity on its outstanding debt is 6%. A comparable firm has an equity beta of 1.4 and a debt ratio (D/(D+E)) of 40%. Assume a risk-free rate of 5% and a market risk premium of 8%. Florida's tax rate is 40%. What discount rate should Florida use?

Reference no: EM133125010

Questions Cloud

Antibiotic resistance : Please watch the video: Woman found to harbor infection resistant to the antibiotic of last resort
What is the difference in the value : What is the difference in the value of a $5,000 annual perpetuity and an annuity of $5,000 for 100 years? Assume that the discount rate is 8%
What is the net present value of this expansion project : Sol expects to recover this amount at the end of the project. What is the net present value of this expansion project at a 16-percent required rate of return
What amount of debt would you need to issue to cover : What amount of equity and what amount of debt would you need to issue to cover the net new financing in order to keep your? debt-equity ratio? constant
What discount rate should florida use : Assume a risk-free rate of 5% and a market risk premium of 8%. Florida's tax rate is 40%. What discount rate should Florida use
Average market share : A hypothesis test is conducted to determine whether AlwaysGreen's U.S. market share decreased this year compared to last year's average market share of 67%.
Why should businesses promote diversity : What does your workplace look like in terms of diversity and What could they do to be more diverse
Implement monetary policy : List and explain three tools of the FED to implement monetary policy for correcting contractions and over-expansions in the business cycle. just summary it
What is the apbo on december : The APBO at the beginning of the year was $30,000. The appropriate discount rate for this postretirement plan is 5%. What is the APBO on December

Reviews

Write a Review

Accounting Basics Questions & Answers

  What is a bank reconciliation statement

Are you familiar with the Accounting Standards? How many accounting standards are there in India? What is a bank reconciliation statement?

  How can the concept of unit-level activities be applied to

how can the concept of unit-level activities be applied to an airline? more specificallywhat are two examples is of

  What is the cost of the ending inventory

On December 31, there were 27 units remaining in ending inventory. Using the perpetual LIFO inventory costing method, what is the cost of the ending inventory

  Prepare a journal entry to record the sale of these notes

Rogers Communication Inc. is a diversified Canadian communications and media company engaged in wireless, Prepare a journal entry to record the sale

  Journalize the formation of this partnership

Journalize the formation of this partnership. J. Gould and N. Abasi are forming a partnership on May 1. J. Gould brings with her $9500 cash and an automobile

  A flexible budget for manufacturing overhead based

Accounting Problem Exercise 24-4 Myers Company uses a flexible budget for manufacturing overhead based on direct labor hours. Variable manufacturing overhead costs per direct labor hour are as follows.

  What is the key purpose and objective of budgets

What is the key purpose and objective of budgets and forecasts, and why are identified milestones and key performance indicators helpful?

  How do you find the annual reports

How do you find the Annual Reports and what are some examples of publicly held companies that might be interesting to review?

  Calculate the amount of each note to be included

Calculate the amount of each note to be included in current and noncurrent liabilities on Mel's building centre December 31 2021 balance sheet

  Discuss what amount can sunburn deduct as meal

Food and drinks cost $900. What amount can Sunburn deduct as meal and entertainment expense

  What is Simone debt-equity ratio

The Simone Company has net income of $146,650. Total assets are $975,000 and the return on equity is 20%. What is Simone's debt-equity ratio

  Calculate the effect of expenses on Amos AGI

Amos is a self-employed tax attorney. Amos pays for all of these expenses. Calculate the effect of these expenses on Amos's AGI

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