Business, 13.10.2020 03:01 21121212cutecheytown

Hankins, Inc., is considering a project that will result in initial after tax cash savings of $4.3 million at the end of the first year, and these savings will grow at a rate of 1.9 percent per year indefinitely. The firm has a target debt-equity ratio of .40, a cost of equity of 10.8 percent, and an aftertax cost of debt of 3.2 percent. The cost-saving proposal is somewhat riskier than the usual project the firm undertakes; management uses the subjective approach and applies an adjustment factor of +2 percent to the cost of capital for such risky projects. Required:
a. Calculate the discount rate for the project.
b. What is the maximum cost the company would be willing to pay for this project?

Answers: 1

Show answers

Another question on Business

Business, 21.06.2019 23:00

The monthly payment m of a loan of amount p for y years with an interest rate r can be calculated by the formula: m = p(r/12) 1 â’ (1 + r/12)â’12y calculate the monthly payment and the cummulative total payment for a $100,000 loan with an interest rate of 4.85% if taken out for 10 years, for 11 years, etc., up to a 30 year term. display the results in a three-column table where the first column is the number of years, the second is the monthly payment, and the third is the cummulative total payment. note: use format bank; for this problem. also, remember to represent the interest rate as a decimal (e.g. 0.0485) 2. a torus-shaped water tube is designed to have a volume of 8, 000in3 . the volume of the tube, v , and its surface area, s, are given by: v = 1 4 ď€ 2 (a + b)(b â’ a) 2 s = ď€ 2 (b 2 â’ a 2 ) if a = kb, determine s, a, and b for k = 0.2, 0.3, 0.7. display the results in a table

Answers: 1

Answer

Business, 22.06.2019 01:20

For a multistate lottery, the following probability distribution represents the cash prizes of the lottery with their corresponding probabilities. complete parts (a) through (c) below. x (cash prize, $) p(x) grand prizegrand prize 0.000000008860.00000000886 200,000 0.000000390.00000039 10,000 0.0000016950.000001695 100 0.0001582930.000158293 7 0.0039114060.003911406 4 0.0080465690.008046569 3 0.012865710.01286571 0 0.975015928140.97501592814 (a) if the grand prize is $13 comma 000 comma 00013,000,000, find and interpret the expected cash prize. if a ticket costs $1, what is your expected profit from one ticket? the expected cash prize is $nothing.

Answers: 3

Answer

Business, 22.06.2019 08:00

At a student café, there are equal numbers of two types of customers with the following values. the café owner cannot distinguish between the two types of students because many students without early classes arrive early anyway (i.e., she cannot price-discriminate). students with early classes students without early classes coffee 70 60 banana 51 101 the marginal cost of coffee is 10 and the marginal cost of a banana is 40. the café owner is considering three pricing strategies: 1. mixed bundling: price bundle of coffee and a banana for 161, or just a coffee for 70. 2. price separately: offer coffee at 60, price a banana at 101. 3. bundle only: coffee and a banana for 121. do not offer goods separately. assume that if the price of an item or bundle is no more than exactly equal to a student's willingness to pay, then the student will purchase the item or bundle. for simplicity, assume there is just one student with an early class, and one student without an early class. price strategy revenue from pricing strategy cost from pricing strategy profit from pricing strategy 1. mixed bundling $ $ $ 2. price separately $ $ $ 3. bundle only $ $ $ pricing strategy yields the highest profit for the café owner.

Answers: 1

Answer

Business, 22.06.2019 13:30

On january 2, well co. purchased 10% of rea, inc.’s outstanding common shares for $400,000, which equaled the carrying amount and the fair value of the interest purchased in rea’s net assets. well did not elect the fair value option. because well is the largest single shareholder in rea, and well’s officers are a majority on rea’s board of directors, well exercises significant influence over rea. rea reported net income of $500,000 for the year and paid dividends of $150,000. in its december 31 balance sheet, what amount should well report as investment in rea?

Answers: 3

Answer

You know the right answer?

Hankins, Inc., is considering a project that will result in initial after tax cash savings of $4.3 m...

Questions