Ballack Inc. is a 100% equity-financed company (no debt or preferred stock); hence, its WACC equals its cost of common equity. Ballanck’s retained earnings will be sufficient to fund its capital budget in the foreseeable future. The company has a beta of 1.7, the risk-free is 6%, and the market risk premium is 4.5%. What is Ballack’s WACC?
13.25%
13.70%
13.55%
13.90%
13.65%
Ballack is considering the following projects for investment next eyar:
ProjectRequired InvetmentExpected Rate of Return
W$1,00013.10%
X$2,00014.10%
Y$3,00013.60%
Z$4,00014.60%
Each project has average risk, and Ballack accepts any project whose expected rate of return exceeds its cost of capital. How large should next year’s capital budget be?
$9,000
$6,000
$7,000
$8,000
$5,000
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Statement I: When equilibrium GDP and full employment GDP are equal, there is no inflationary gap and no deflationary gap.Statement II: Equilibrium GDP is an ideal goal that can never be attained. A) Statement I is true and statement II is false. B) Statement II is true and statement I is false. C) Both statements are true. D) Both statements are false. 31. When government expenditures in a given year are less than tax receipts, there exists A) a budget deficit. B) public revenue. C) full-employment taxation. D) a budget surplus .32. As price rises, the quantity ______________ rises. A) demanded B) supplied C) demanded and supplied 33. If the MPC were .75, what change in government spending (in billions of dollars) would be required to cause the equilibrium level of GDP to fall by 100? A) A decrease of 25. B) A decrease of 50. C) A decrease of 75. D) A decrease of 100. E) A decrease of 125. (I will send the image) 34. 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