Alocal town is under pressure from voters to close a polluting factory. the head of the homeowner’s organization argues that the pollution is a menace, and if the full external costs of the pollution were included, the factory would be profitable. the homeowners calculate that the pollution generates an external cost of $3,000,000 per year in medical bills and $1,000,000 per year in suppressed property values (the difference in home prices with and without the pollution). the factory, on its books, makes a profit of $5,000,000 per year. i.what is the external cost of the pollution? ii. if the factory is forced to consider the total social costs of pollution, would it be profitable? iii. how much could the town tax the factory before profits become zero? iv. what does the coase theorem suggest about negotiations between the town and the factory?
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Business, 22.06.2019 08:40
Calculate the cost of each capital component—in other words, the after-tax cost of debt, the cost of preferred stock (including flotation costs), and the cost of equity (ignoring flotation costs). use both the capm method and the dividend growth approach to find the cost of equity.calculate the cost of new stock using the dividend growth approach.what is the cost of new common stock based on the capm? (hint: find the difference between re and rs as determined by the dividend growth approach and then add that difference to the capm value for rs.)assuming that gao will not issue new equity and will continue to use the same target capital structure, what is the company’s wacc? e. suppose gao is evaluating three projects with the following characteristics.each project has a cost of $1 million. they will all be financed using the target mix of long-term debt, preferred stock, and common equity. the cost of the common equity for each project should be based on the beta estimated for the project. all equity will come from reinvested earnings.equity invested in project a would have a beta of 0.5 and an expected return of 9.0%.equity invested in project b would have a beta of 1.0 and an expected return of 10.0%.equity invested in project c would have a beta of 2.0 and an expected return of 11.0%.analyze the company’s situation, and explain why each project should be accepted or rejected g
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Business, 22.06.2019 10:30
How are interest rates calculated by financial institutions? financial institutions generally calculate interest as (1) interest or (.
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Business, 22.06.2019 11:00
Abank provides its customers mobile applications that significantly simplify traditional banking activities. for example, a customer can use a smartphone to take a picture of a check and electronically deposit into an account. this unique service demonstrates the bank’s desire to practice which one of porter’s strategies?
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Business, 22.06.2019 22:20
Which of the following is correct? a. a tax burden falls more heavily on the side of the market that is more elastic.b. a tax burden falls more heavily on the side of the market that is less elastic.c. a tax burden falls more heavily on the side of the market that is closer to unit elastic.d. a tax burden is distributed independently of the relative elasticities of supply and demand.
Answers: 1
Alocal town is under pressure from voters to close a polluting factory. the head of the homeowner’s...
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