Business, 04.05.2021 19:30 kimryan520

Jeff Bezos has just promoted you to Chief Financial Officer of Amazon. You find on your desk plans for Amazona€™s latest project: to corner the paper clip market by buying the worlda€™s largest paper clip manufacturing company. Your financial analysts have determined that this project will be a lot less risky than any of Amazona€™s other current operations, since paper clips will probably continue to be used at the current level well into the foreseeable future. You were not able to find a pure play paper clip company during your analysis. Amazona€™s overall WACC is 10%. Which of the following would be a reasonable course of action to take? a. Take 3 percentage points off the company’s overall WACC, since this project is less risky than Amazon’s overall operations
b. Use 10% as the project’s WACC, since risk does not play a role in WACC
c. Add 3 percentage points to the company’s overall WACC, because lower risk would lead to a higher WACC
d. Use an average of pure-play paper clip companys' WACC's as a proxy for this project’s WACC
e. Both A and D are reasonable courses of action for you to take

Answers: 3

Show answers

Another question on Business

Business, 21.06.2019 22:30

The blank is type of decision-maker who over analyzes information

Answers: 1

Answer

Business, 22.06.2019 07:00

Imagine you own an established startup with growing profits. you are looking for funding to greatly expand company operations. what method of financing would be best for you?

Answers: 2

Answer

Business, 22.06.2019 15:20

Sauer food company has decided to buy a new computer system with an expected life of three years. the cost is $440,000. the company can borrow $440,000 for three years at 14 percent annual interest or for one year at 12 percent annual interest. assume interest is paid in full at the end of each year. a. how much would sauer food company save in interest over the three-year life of the computer system if the one-year loan is utilized and the loan is rolled over (reborrowed) each year at the same 12 percent rate? compare this to the 14 percent three-year loan.

Answers: 3

Answer

Business, 22.06.2019 20:00

On january 1, year 1, purl corp. purchased as a long-term investment $500,000 face amount of shaw, inc.’s 8% bonds for $456,200. the bonds were purchased to yield 10% interest. the bonds mature on january 1, year 6, and pay interest annually on january 1. purl uses the effective interest method of amortization. what amount (rounded to nearest $100) should purl report on its december 31, year 2, balance sheet for these held-to-maturity bonds?

Answers: 1

Answer

You know the right answer?

Jeff Bezos has just promoted you to Chief Financial Officer of Amazon. You find on your desk plans f...

Questions