What is the expected ear of the 60000 equity investment

Assignment Help Finance Basics
Reference no: EM13305343

You have been offered following risky investment, invest 100000 today, and you will have the following positive expected future cash flows: 1968 per month for the next 60 months (at the end of each month) and an additional 25746 at the end of 60 months.

Now suppose you have only 60000 you can invest, but you can borrow the other 40000 needed to make the risky investment given above. The loan for the 40000 will be a 7.8% APR installment loan, with monthly payments what is the expected EAR of the 60000 equity investment?

 

Reference no: EM13305343

Questions Cloud

Estimate the intensity of sound : Sound 1 has an intensity of 35.0 W/m^2. Sound 2 has an intensity level that is 2.7 dB greater than the intensity level of sound 1
All pairs of homologous chromosomes lined up : If all pairs of homologous chromosomes lined up non-randomly along the metaphase plate in meiosis
Ellipse construction via foci method : Ask question ellipse construction via foci method
What is financial leverage : If you consider the debt tax shield, all the firms should have as much debt as they can, why then do we find that firms have not high levels of debt?
What is the expected ear of the 60000 equity investment : Now suppose you have only 60000 you can invest, but you can borrow the other 40000 needed to make the risky investment given above. The loan for the 40000 will be a 7.8% APR installment loan, with monthly payments what is the expected EAR of the 6..
What do you think richard heard actually does : Summarise the job of the operations director. What are the main issues/problems he faces in managing the airport and what do you think Richard Heard actually does each day (how does he spend his time)?
The characteristics of each good : Analyze the characteristics of each of these goods. Focus on the characteristics that define each good as "public" or "private." Based on the characteristics of each good, argue whether the price elasticity of each of these goods would be relativ..
What rate of growth must be expected for sidman : Sidman's products' stock is currently selling for $60 per share. The firm is expected to earn $5.40 per share this year and to pay a year-end dividend of $3.60.
How fast will the snowmobile move downhill : A snowmobile climbs a hill at 15 mi/hr. The hill has a grade of 1 ft rise for every 40 ft.  How fast will the snowmobile move downhill

Reviews

Write a Review

Finance Basics Questions & Answers

  How attractive is the boeing 7e7 project

Judged against your WACC, how attractive is the Boeing 7E7 project?

  Calculating degree of financial leverage

Illinois Tool Corporation fixed operating expenses are $1,260,000 and its variable cost ratio (ie. variable costs are as a fraction of sales) is 0.70. The firm has $3,000,000 in bonds outstanding at an interest rate of 8 percent.

  Financial planning improve performance

ABC Construction LLC is a construction firm owned by Mr. Mohammad. Mr. Mohammad established the company 7 years ago in Dubai.  Now it has branches in Emirates.

  Present value of stream of cash flows

Find out the present value of following stream of cash flows supposing that the firm's cost is 14% and that these amounts are received at the end of each year.

  Define bootstrap financing

What is bootstrap financing it? Why don't all firms use bootstrap financing? Are there any dangers with this approach?

  Draw a cumulative frequency polygon

Midland national bank selected a sample of forty student checking accounts. Below are their end-of-month balances.

  What must be the dividend yield

Shares of common stock of the Samson Co. offer an expected total return of 21.2%. The dividend is increasing at a constant 5.8% per year. What must be the dividend yield?

  Calculate expected rate of return on the stock

Rate of Return. Steady As She Goes, Corporation will pay a year-end dividend of $3 per share. Investors expect the dividend to increase at a rate of 4% indefinitely.

  Cisco systems and successful acquisitions

Investigate the approach that Cisco Systems has used in its many successful acquisitions. What are some of the human resource practices that have made its acquisitions successful?

  What was the addition to net working capital

If net fixed assets increased by $25,000 during the year, what was the addition to net working capital?

  What is the discount rate applicable to division a

Management has told the manager of division A that projects in his division will be assigned a discount rate that is 2 percent less than the firm's weighted average cost of capital. What is the discount rate applicable to division A?

  Currencies against the dollar

Currencies of some Latin American countries, such as Brazil and Venezuela, frequently weaken against most other currencies. What concept in this chapter explains this occurrence?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd