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 you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers
You Might be Interested in
CraneCompany is a publicly held corporation whose $1 par value stock is actively traded at $31 per share. The company issued 3300 shares of stock to acquire land recently advertised at $106000.
Answers (1)
What's the best way for the FED (Federal Reserve Board) to create a tight money market? Buy government bonds and sell government bonds Sell government bonds Buy government bonds Sell government bonds and raise the discount rate
Answers (1)
The three things counselors should listen for are clients' concerns, feelings about the concerns, and a. the expectation the client has for counseling. b. what others people think about the client's problems. c. how the past has caused the problem.
Answers (1)
Rufus, a supervisor at an automobile store, is considered friendly by his subordinates and has the authority to assign important work to high performers under his wing. But he does not chalk out clear objectives for his workers.
Answers (1)
What are the advantages of a bank savings account? Aggressive, high rate of return Aggressive, low risk High liquidity, high rate of return High liquidity, low risk
Answers (1)
New Questions in Business
Select the item that can be answered by using knowledge. 1. A transaction's order date, amount sold, and quantity ordered 2. Taking into account external reasons for the recent underperformance of a good salesperson 3.
Answers (1)
What role do entrepreneurs play in economics? Entrepreneurs tell consumers what they should want or need. Entrepreneurs create the businesses that produce products and services that meet the wants and needs of consumers.
Answers (1)
Zhang company reported cost of goods sold of $842,000, beginning inventory of $38,600 and ending inventory of $47,000. the average inventory amount is:
Answers (1)
Aces Inc., a manufacturer of tennis rackets, began operations this year. The company produced 6,200 rackets and sold 5,100. Each racket was sold at a price of $92.
Answers (1)
Farmbeck, Inc. used direct materials of $500,000 and conversion costs of $535,500. Farmbeck started 100,000 units into production during the month, of which 92,000 units were completed.
Answers (1)