A bakery company is considering one capital budgeting project involving the replacement of a sophisticated brick oven, and another capital budgeting project involving research and development into synthetic food substitutes. Which of the following statements is MOST correct concerning the riskminusadjusted discount rate (s) for the projects?
A. The rate should be the same for both projects because they are being considered by one company with the same common shareholders.
B. The rate should be higher for the replacement project because the company is more certain of the returns from a project similar to their existing business.
C. The rate will likely be higher for the replacement project because the likelihood of success is higher.
D. The rate will likely be higher for the research and development project because of the uncertainty involved with research and development projects.
Answers (1)
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “A bakery company is considering one capital budgeting project involving the replacement of a sophisticated brick oven, and another capital ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
Suppose you deposit $1,908.00 into and account 4.00 years from today into an account that earns 6.00%. How much will the account be worth 14.00 years from today?
Answers (1)
Placker Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours.
Answers (1)
Disney World in Orlando, FL has several theme parks, resorts, restaurants, and stores. Each is intentionally created to offer a memorable event for visitors.
Answers (1)
The Massoud Consulting Group reported net income of $1,380,000 for its fiscal year ended December 31, 2021.
Answers (1)
When jeremy completed his study program in the plumber's union hall, he was assigned to work with an older plumber to learn the trade in practice. this method of training is called?
Answers (1)
New Questions in Business
Riverrun Co. provides medical care and insurance benefits to its retirees. In the current year, Riverrun agrees to pay $45,500 for medical insurance and contribute an additional $10,000 to a retirement program. 1.
Answers (1)
Here are selected data for Wilson Company: Estimated manufacturing overhead $ 247 comma 760$247,760 Factory utilities $30,200 Estimated labor hours 35,000 Indirect labor $22,400 Actual direct labor hours 36,000 Sales commissions $53,700 Estimated
Answers (1)
Advanced Analysis) Suppose that the linear equation for consumption in a hypothetical economy is: C = 40 + 0.8Y Also suppose that income (Y) is $400. Determine the values for the following: MPC, MPS, C (consumption), APC, S (savings), APS
Answers (1)
In international business, a relatively high level of fixed costs can make it economical to perform a particular activity in several locations at once. True / False.
Answers (1)
You are given the following information about a portfolio you are to manage. For the long term, you are bullish, but you think the market may fall over the next month. Portfolio Value $ 1 million Portfolio's Beta 0.
Answers (1)