Rationalize the appropriateness of using the cost of capital to analyze normally risky projects and higher rates
Question:
Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 30% (13 reviews)
Risky projects are less desirable than low risk projects with the same ...View the full answer
Answered By
Asim farooq
I have done MS finance and expertise in the field of Accounting, finance, cost accounting, security analysis and portfolio management and management, MS office is at my fingertips, I want my client to take advantage of my practical knowledge. I have been mentoring my client on a freelancer website from last two years, Currently I am working in Telecom company as a financial analyst and before that working as an accountant with Pepsi for one year. I also join a nonprofit organization as a finance assistant to my job duties are making payment to client after tax calculation, I have started my professional career from teaching I was teaching to a master's level student for two years in the evening.
My Expert Service
Financial accounting, Financial management, Cost accounting, Human resource management, Business communication and report writing. Financial accounting : • Journal entries • Financial statements including balance sheet, Profit & Loss account, Cash flow statement • Adjustment entries • Ratio analysis • Accounting concepts • Single entry accounting • Double entry accounting • Bills of exchange • Bank reconciliation statements Cost accounting : • Budgeting • Job order costing • Process costing • Cost of goods sold Financial management : • Capital budgeting • Net Present Value (NPV) • Internal Rate of Return (IRR) • Payback period • Discounted cash flows • Financial analysis • Capital assets pricing model • Simple interest, Compound interest & annuities
4.40+
65+ Reviews
86+ Question Solved
Related Book For
Question Posted:
Students also viewed these Finance questions
-
Risk in capital projects is the probability that a project will earn less than expected. Make up and describe one hypothetical project in each of the replacement, expansion, and new venture...
-
Higher interest rates won't cost you as much to drive a car as do higher gasoline prices. This is because automobile loans have payment schedules that are only modestly impacted by Federal Reserve...
-
Risky projects are accepted for investment on the basis of favorable expectations concerning profitability. In the post-audit process, they must not be unfairly criticized for failing to meet those...
-
The following inventory information is available for Ricci Manufacturing Corporation for the year ended December 31, 2017: Beginning Ending Inventories: Raw materials Work in process Finished goods...
-
An (equivalent) alternative to performing a partial F test for the significance of adding a new variable to a model while controlling for variables already in the model is to perform a t test using...
-
When might deferral of taxes on a retirement account be an unwise choice?
-
Refer to the bond situation of Hewitt Corporation in Exercise 15-27. Hewitt issued the bonds at the advertised price. The company uses the straight-line amortization method and reports financial...
-
AAA Life Insurance Companys (ALIC) most popular life insurance policy is P20Aa permanent, 20-year life annuity policy. This policy sells in $10,000 increments depending on the policyholders needs and...
-
Graphics Corporation is owned 30% by John; 20% by Susan (John's wife); 25% by John's father, Bill; 5% by Lori; and 5% by Brad. Lori and Brad are John and Susan's children. Family members are a...
-
You have been hired by Agirich Appraisal. Your next assignment is to provide the indicated value for a subject property using the cost approach. Be sure to adjust for land classification, financing...
-
One of the problems of using simulation to incorporate risk into capital budgeting is related to the idea that the probability distributions of successive cash flows usually are not independent. If...
-
Evaluate the conceptual merits of applying CAPM theory to the problem of determining risk adjusted interest rates for capital budgeting purposes. Form your own opinion based on your study of CAPM...
-
Jimmy Langenberger is the president of TemPro, Inc., a company that provides temporary employees for not-for-profit companies. TemPro has been operating for five years; its revenues are increasing...
-
When the U.S. dollar is strong relative to other nations currencies, what is the effect on imports and exports?
-
Can a middleman be eliminated from a marketing channel? Explain.
-
What is logistics? Which major functions does it include?
-
When Targets CEO Brian Cornell announced the company would spend $7 billion for capital improvements and $1 billion more per year for operating costs to modernize operations for the digital age,...
-
After its initial public offering (IPO), DoorDash started trading publicly on the New York Stock Exchange (NYSE) in December 2020. An IPO occurs when a corporation sells stock to the general public...
-
Name the polygon
-
A new car sold for $31,000. If the vehicle loses 15% of its value each year, how much will it be worth after 10 years?
-
Two of the pumps in Fig. P12.24 are operated in series to supply water through the piping system. Determine the flow rate through the piping system for \(10^{\circ} \mathrm{C}\) water and screwed...
-
Clancy Inc. is considering a project with the following cash flows. a. Clancy has a policy of rejecting all projects that dont pay back within three years and analyzing those that do more carefully...
-
Should the project being considered in the previous problem be accepted or rejected based on IRR? (Hint: Start by guessing 11% for IRR.)
-
Hamstring Inc. is considering a project with the following cash flows. The company is reluctant to consider projects with paybacks of more than three years. If projects pass the payback screen, they...
-
The severity of many sports injuries is related to the magnitude of the acceleration that an athlete's body undergoes as it comes to rest, especially when joints (such as ankles and knees) are not...
-
solve x-x-12=0
-
Briefly describe the application of each of the following methods used in assessing candidates. 1 Conducting the Interview 2 Selection Activities Outline below, a minimum of two (2) strategies you...
Study smarter with the SolutionInn App