Soumya lives along the banks of the Missouri River and is aware that her house may flood. Two electric motors are being considered to drive a pump needed to keep the basement dry, but she only has cash for one of the motors. Each motor is capable of delivering 60 horsepower of output to the pumping operation. It is expected that the motors will be in use 800 hours per year. The following data are available: Electric motors Motor A Motor B Capital Investment $1,300 $1,500 Electrical efficiency 0.75 0.8 Annual maintenance $160 $120 Useful life 4 6 years Assume that electricity costs $0.06 per kilowatt-hour, the projects are both repeatable, and that Soumya uses a MARR of 8% per year. Neither pump retains any salvage value at the end of its lifetime. Recall that 1 hp0.746 kW. Efficiency defines what percentage of the power drawn from the power outlet is actually converted to useful output. As a result, both pumps deliver 60 hp of useful output, but Motor A will consume more electricity because it is less efficient. What is the annual worth of the costs associated with the preferred option? Express your answer as a positive value, rounded to the nearest dollar.

If a firm plans to issue new stock, flotation costs (investment bankers' fees) should not be ignored. there are two approaches to use to account for flotation costs. the first approach is to add the sum of flotation costs for the debt, preferred, and common stock and add them to the initial investment cost. because the investment cost is increased, the project's expected return is reduced so it may not meet the firm's hurdle rate for acceptance of the project. the second approach involves adjusting the cost of common equity as follows: . the difference between the flotation-adjusted cost of equity and the cost of equity calculated without the flotation adjustment represents the flotation cost adjustment. quantitative problem: barton industries expects next year's annual dividend, d1, to be $1.90 and it expects dividends to grow at a constant rate g = 4.3%. the firm's current common stock price, p0, is $22.00. if it needs to issue new common stock, the firm will encounter a 6% flotation cost, f. assume that the cost of equity calculated without the flotation adjustment is 12% and the cost of old common equity is 11.5%. what is the flotation cost adjustment that must be added to its cost of retaine

Select the word from the list that best fits the definition sometimes

Mikkelson corporation's stock had a required return of 12.50% last year, when the risk-free rate was 3% and the market risk premium was 4.75%. then an increase in investor risk aversion caused the market risk premium to rise by 2%. the risk-free rate and the firm's beta remain unchanged. what is the company's new required rate of return? (hint: first calculate the beta, then find the required return.) do not round your intermediate calculations.