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Rivian, a new electric vehicle maker, just went public and they are trying to determine a reasonable MARR for their young industry. Currently, they can borrow small amounts of money at 9.5% interest and they have heard from their initial private venture capitalists that they want an average return of 25%. However, going forward, they will not have to meet the expectations of the venture capitalists as they are selling stock in the stock market that has returned about 15% return average for the last several years. What do you think you would recommend for a MARR Range? D. Recommend a 10% MARR because that is higher than your borrowing rate A. Recommend a 5% MARR because you are a new company and investors can't expect much B. Recommend a 30% MARR because if you are ever going to have to catch up with Tesla, it needs to be high C. Recommend a 18% MARR because you need to be slightly higher than the stock market returns to cover risk

Rivian, a new electric vehicle maker, just went public and they are trying to determine a reasonable MARR for their young industry. Currently, they can borrow small amounts of money at 9.5% interest and they have heard from their initial private venture capitalists that they want an average return of 25%. However, going forward, they will not have to meet the expectations of the venture capitalists as they are selling stock in the stock market that has returned about 15% return average for the last several years. What do you think you would recommend for a MARR Range? D. Recommend a 10% MARR because that is higher than your borrowing rate A. Recommend a 5% MARR because you are a new company and investors can't expect much B. Recommend a 30% MARR because if you are ever going to have to catch up with Tesla, it needs to be high C. Recommend a 18% MARR because you need to be slightly higher than the stock market returns to cover risk

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Rivian, a new electric vehicle maker, just went public and they are trying to determine a reasonable MARR for their young industry. Currently, they can borrow small amounts of money at 9.5% interest and they have heard from their initial private venture capitalists that they want an average return of 25%. However, going forward, they will not have to meet the expectations of the venture capitalists as they are selling stock in the stock market that has returned about 15% return average for the last several years. What do you think you would recommend for a MARR Range? D. Recommend a 10% MARR because that is higher than your borrowing rate A. Recommend a 5% MARR because you are a new company and investors can't expect much B. Recommend a 30% MARR because if you are ever going to have to catch up with Tesla, it needs to be high C. Recommend a 18% MARR because you need to be slightly higher than the stock market returns to cover risk
Transcribed Image Text:Rivian, a new electric vehicle maker, just went public and they are trying to determine a reasonable MARR for their young industry. Currently, they can borrow small amounts of money at 9.5% interest and they have heard from their initial private venture capitalists that they want an average return of 25%. However, going forward, they will not have to meet the expectations of the venture capitalists as they are selling stock in the stock market that has returned about 15% return average for the last several years. What do you think you would recommend for a MARR Range? D. Recommend a 10% MARR because that is higher than your borrowing rate A. Recommend a 5% MARR because you are a new company and investors can't expect much B. Recommend a 30% MARR because if you are ever going to have to catch up with Tesla, it needs to be high C. Recommend a 18% MARR because you need to be slightly higher than the stock market returns to cover risk
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