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You own a lot in Key West, Florida, that is currently unused. Similar lots have recently sold for $1,290,000. Over the past five years, the price of land in the area has increased 5 percent per year, with an annual standard deviation of 34 percent. A buyer has recently approached you and wants an option to buy the land in the next 12 months for $1,440,000. The risk-free rate of interest is 3 percent per year, compounded continuously.
How much should you charge for the option? (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16))
Call price-?
Sixteenth Bank has an issue of 6% preferred stock with a $100.00 par value that just sold for $89 per share. What is the bank’s cost of preferred stock? (Show your work and round your answer to two decimal places).
Briefly explain the following statement: The standalone risk of an individual corporate project may be quite high, but viewed in the context of its effect on stockholders’ risk, the project’s true risk may be much lower.
To estimate the cost of capital, you need to include an estimate of the cost of debt and calculate the weighted average cost of capital for your company.) Estimate the free cash flows to the firm for the future.
You receive a credit card application from Shady Banks Savings and Loan offering an introductory rate of 3.2 percent per year, compounded monthly for the first six months, increasing thereafter to 18.1 percent compounded monthly. Required: Assuming y..
Suppose a customer's house increased in value over five years from $ 150,000 to $ 250,000. What was the annual growth rate of the property value during this five-year interval? Three local banks pay different interest rates on time deposits with one-..
the discussion board db is part of the core of online learning. classroom discussion in an online environment requires
A numerical value used as a summary measure for a sample, such as sample mean, is known as a. The difference between the largest and the smallest data values is the. The numerical value of the standard deviation can never be. Which of the following s..
The covariance of the returns between Willow Stock and Sky Diamond Stock is 0.0990. The variance is 0.2540, and the variance of Sky Diamond is 0.1370. What is the correlation coefficient between the returns of the two stocks?
A project has a life of 10 years, and no salvage value. The firm uses an interest rate of 12% to evaluate projects. This project has an uncertain initial cost and net revenue as below. A. Joint probability distribution for cost and net revenue B.
What is the present value of the following payment stream, discounted at 8% annually; $1000 at the end of year 1, $2000 at the end of year 2, and $3000 at the end of year 3?
Estes Park Corp. pays a constant $1.7 dividend on its stock. The company will maintain this dividend for the next 17 years and will then cease paying dividends forever. If the required return on this stock is 2.34 percent, what is the current share p..
At time =0 an engineer deposited $10000 into an account that pays interest at 8% per year,, compounded semi annually. If she withdrew $1000 in months 2,11, and 23, what was the total value of the account at the end of 3 years? Assume NO inter period ..
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