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As manager of short-term projects, you are trying to decide whether or not to invest in a short-term project that pays one cash flow of $1,000 one year from today. The total cost of the project is $950. Your alternative investment is to deposit the money in a one-year bank Certificate of Deposit which will pay 4% compounded annually.
a. Assuming the cash flow of $1,000 is guaranteed (there is no risk you will not receive it) what would be a logical discount rate to use to determine the present value of the cash flows of the project?
b. What is the present value of the project if you discount the cash flow at 4% per year? What is the net present value of that investment? Should you invest in the project?
c. What would you do if the bank increases its quoted rate on one-year CDs to 5.5%?
d. At what bank one-year CD rate would you be indifferent between the two investments?
From last three years, the common stock of Makkeny Corporation sold for $63.29 on the NYSE. Today, the current share price for the firm is $38.61. The company paid no dividends over this period of time and Makkeny executed a two for one stock split 2..
Phil had an unpaid balance of $1,854.50 on his credit card statement at the starting of December. He made a payment of $45.00 during the month.
Computation of actual nominal rate of return on the bond and A bond produces a real rate of return of 5.03 percent for a time period when the inflation rate is 3.30 percent
Bohen Inc is expexted to pay $1.50 per share dividend of the year is $1.50. The dividend is expected to grow at constant rate of 7 percent. The required rate of return on the stock r is 15 percent.
Jeremy Kohn is planning to invest in a 10-year bond that pays a 12 percent coupon. The current market rate for similar bonds is 9 percent. Assume semi-annual coupon payments.
Computation of value of call option and put option and What is the value of following options
How would you compute the present and future value of following annuity streams? $5,000 received each year for 5 years on the first day of each year if your investments pay 6 percent compounded annually.
Suppose you're a trader with Deutsche Bank. From the quote screen on your computer terminal, you notice that Dresdner Bank is quoting ?0.7627/$1.00 and Credit Suisse is offering SF1.1806/$1.00.
Suppose that Loras Corporation imported goods from New Zealand and needs 100,000 New Zealand dollars 180 days from now.
There are 25 years to maturity. Compute the price of the bonds based on semiannual analysis. With 20 years to maturity, if yield to maturity goes down substantially to 8 percent, what will be the new price of the bonds?
Briefly explain and identify the three types of cost estimates. Cite any pertinent examples from your own experience in working with these types of cost estimates.
Theory problem based on Merging and acquisition and the wave of bank mergers in the past decade has resulted in substantial industry consolidation
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