Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. ans ? hankins, inc., is considering a projec

ans ? Hankins, Inc., is considering a project that...

70.2K

Verified Solution

Question

Finance

ans ?
image
Hankins, Inc., is considering a project that will result in initial aftertax cash savings of $6.1 million at the end of the first year, and these savings will grow at a rate of 3 percent per year indefinitely. The firm has a target debt-equity ratio of .60, a cost of equity of 13 percent, and an aftertax cost of debt of 5.5 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 +3 percent to the cost of capital for such risky projects. a. Calculate the required return for the project. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the maximum cost the company would be willing to pay for this project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) % a. Project required return b. Maximum to pay $ 22.58

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

You are considering adding a new item to your company’s line of products. The machine required...

Finance
Q

Epigenetics basically refers to changes in gene activity without a change in base content of DNA....

Biology
Q

Please explain why a photodetector or solar cell can be made from either a direct band...

Electrical Engineering
Q

You also have been asked to determine at both the 2% and 5% levels of significance...

Basic Math
Q

A projectile is fired at 30 with momentum p neglecting friction the change in kinetic...

Physics
Q

0 The reference level is the ground in this question A person lifts a bucket...

Physics
Q

Describe what is misleading in the visual display of data below Marijuana Use Among College...

Basic Math
Q

Part A: The number of cubic feet of water, y, in a pool x hours...

Basic Math
Q

Suppose the monthly cost for the manufacture of golf balls is C(x) = 3310 +...

Basic Math
Q

Activity A B C D E F G H 1 Predecessor s A A A...

Statistics
Q

Smythe Manufacturing has 27,000 labor hours available for producing X and Y. Consider the following...

Accounting
Q

On December 31,2023, Ainsworth, Incorporated had 600 million shares of common stock outstanding. ...

Accounting