Suppose you are interested in studying the determinants of wages. You plan to use the following model: wage=β0+β1educ+β2exper+u where wage = annual salary, in thousands of dollars educ = years of education exper = years of work experience You run the regression, and obtain the following results: wageˆ=14+1.8 educ+2.5 exper n = 200 R2 = 0.07 The predicted wage for an individual with 21 years of education and 5 years of experience is . The predicted wage for an individual with the same years of education but one additional year of work experience (that is, 6 years) is . The marginal effect of one extra year of work experience is . The R2 of this regression indicates that % of the variation in wage is explained by educ and exper together. Suppose you suspect that wages might be affected by the weight of each individual, either through discrimination based on weight by employers or decreased productivity, and therefore wages, brought on by an unhealthy weight. You decide to include body mass index (BMI) as a third explanatory variable to your regression. True or False: Assuming you use the exact same data set as before, adding the explanatory variable bmi will always decrease the R2 . True False

The market yield on spice grills' bonds is 15%, and the firm's marginal tax rate is 33%. what is their shareholders' required return if the equity risk premium is 4%?

Afirm's before-tax cost of debt, rd, is the interest rate that the firm must pay on debt. because interest is tax deductible, the relevant cost of debt used to calculate a firm's wacc is the cost of debt, rd (1 – t). the cost of debt is used in calculating the wacc because we are interested in maximizing the value of the firm's stock, and the stock price depends on cash flows. it is important to emphasize that the cost of debt is the interest rate on debt, not debt because our primary concern with the cost of capital is its use in capital budgeting decisions. the rate at which the firm has borrowed in the past is because we need to know the cost of capital. for these reasons, the on outstanding debt (which reflects current market conditions) is a better measure of the cost of debt than the . the on the company's -term debt is generally used to calculate the cost of debt because more often than not, the capital is being raised to fund -term projects. quantitative problem: 5 years ago, barton industries issued 25-year noncallable, semiannual bonds with a $1,600 face value and a 8% coupon, semiannual payment ($64 payment every 6 months). the bonds currently sell for $845.87. if the firm's marginal tax rate is 40%, what is the firm's after-tax cost of debt? round your answer to 2 decimal places. do not round intermediate calcu

According to management education expert ashok rao, companies can increase their profitability by through careful inventory management. a. 5% to 10% b. 10% to 25% c. 20% to 50% d. 75%