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Currently, DEF Ltd. Has a beta of 1 and its sales and profits are positively correlated with the overall economy. The company estimates that a proposed new project would have a higher standard deviation and coefficient of variation than one of the company's average projects. Also, the new project's sales would be counter-cyclical in the sense that they would be high when the overall economy is down and low when the overall economy is strong. On the basis of this information, which of the following is true?
A) The proposed new project would have more stand-alone risk than the firm's typical projectB) The proposed new project would increase the firm's corporate riskC) The proposed new project would not affect the firm's risk at allD) The proposed new project would have less stand-alone risk than the firm's typical project
The equipment will have a depreciable life of 8 years and will be depreciated to a book value of $155,000 using a straight line depreciation. The cost of capital is 11% and the firm's tax rate is 30%. Estimate the present value of the tax benefits..
Explain Plotting a chart of the efficient frontier of risky assets and in a world where there are no risk free assets and just these three risky assets
The inventory has a book value of $53,300 and an estimated market value of $71,200. If the store compiled a balance sheet as of today, what would be the book value of the current assets?
Ang Electronics, Inc., has created a new DVDR. If the DVDR is successful, the present value of the payoff [when the product is brought to market] is $21.2 million.
Computation of earnings before interest and taxes based on sensitivity analysis and the fixed and variable cost estimates are considered accurate within a plus or minus 6% range
If Welch establishes its dividends from the residual dividend model, what will be its payout ratio? Round your answer to two decimal places.
In light of your findings, discuss the potential risks and returns from using put otions to attempt to profit from an anticipated decline in share price?
A stock has a beta of 1.55, the expected return on the market is 12 percent, and the risk-free rate is 4.8 percent. What must the expected return on this stock be?
Tugan's Turf Farm owned the following items of property, plant and equipment as at 30 June 2012:Prepare general journal entries to record the above transactions and the depreciation journal entries required at the end of each reporting period up to 3..
Suppose your friend, Michelle, has just purchased a buy. Because Michelle knows that you have just received your Associate's in Management at a university, she has asked for you for help in evaluating the company.
A polisher costs $10,000 and will cost $20,000 a year to operate and maintain. If the distcount rate is 10% and the polisher will last for 5 years, what is the equivalent annual cost of the tool?
If the relevant tax rate is 35 percent, what is the after tax cash flow from the sale of this asset?
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