math

posted by .

Smith and Jones has two separate divisions. Division X produces custom work on a pre-paid basis only for long-term customers and therefore, is subject to less risk than division Y. The company has assigned a discount rate equal to the firm's WACC minus 2 percent to division X and a rate equal to the firm's WACC plus 3 percent to division Y. The company has a debt-equity ratio of .65 and a tax rate of 35 percent. The cost of equity is 9 percent and the aftertax cost of debt is 5 percent. Presently, each division is considering a new project. Division Y's project provides a 9.5 percent rate of return and division X's project provides a 6.2 percent return. Which projects, if either, should the company accept?




a. accept both X and Y
b. accept X and reject Y
c. reject X and accept Y
d. reject both X and Y
e. The answer cannot be determined without additional information.

Respond to this Question

First Name
School Subject
Your Answer

Similar Questions

  1. Transfer Pricing

    The per unit cost details are as followers: Machining Finishing Transferred in cost N/A $27 Variable cost $24 9.00 Allocated fixed costs 3.00 13.50 Full cost per unit 27.00 49.50 An external supplier has offered to supply a product …
  2. math

    how do i do long division? This web site may help you. http://www.coolmath4kids.com/long-division/long-division-lesson-1.html dont listen to drbob222
  3. Pre Calc (For Reiny)

    Thanks so much your method worked perfectly! My solution was: the remaining zeros were 5+2i, 3, and -4 I have one question that's bugging me though, why is it that synthetic division did not work for me?
  4. college Managerial accounting

    Problem 47 Simon Hinson Company operates two divisions: Gordon and Ronin. A segmented income statement for the company‚Äôs most recent year is as follow: Total Company Gordon Division Ronin Division Sales $850,000 $250,000 $600,000 …
  5. lisa

    This is a question given to me to answer:How is dividing a polynomial by a binomial similar to or different from the long division you learned in elementary school?
  6. Quadratic Long Division question?

    How do i do this using long division? This is part of a Partial Fractions Question. Please help, thanks! (x^3) / (x^3 - 2x^2 + 3x - 18) I tried using long division, but I could only get a quotient of 1, and a remainder of 2x^2 - 3x
  7. business

    Direct verse indirect cost Estep Construction Company is composed of two divisions: (1) Home Construction and (2) Commercial Construction .The Home Construction Division is in the process of building 12 houses and the Commercial Division …
  8. Economics

    A large firm has two divisions: an upstream division that is a monopoly supplier of an input whose only market is the downstream division that produces the final output. To produce one unit the final output, the downstream division …
  9. Math

    In a sports league there are two divisions with eight teams each. Each team plays every other team within its division 12 times, but it plays only 6 games with each team from the other division. In all, how many games are played by …
  10. college finite math

    A division of a company produces "Personal Income Tax" diaries. Each diary sells for $6. The monthly fixed costs incurred by the division are $30,000, and the variable cost of producing each diary is $1. (a) Find the break-even point …

More Similar Questions