Which alternative is superior

Assignment Help Financial Management
Reference no: EM13932840

Investment A costs $10,000 today and pays back $11,500 two years from now. Investment B costs $8000 today and pays back $4500 each year for two years. If an interest rate of 5% is used, which alternative is superior?

Reference no: EM13932840

Questions Cloud

What is the expected return on portfolio : You own a portfolio that has $1,500 invested in Stock A and $3,550 invested in Stock B. If the expected returns on these stocks are 9 percent and 15 percent, respectively, what is the expected return on the portfolio?
Where will the peer mediation take place : What is peer mediation, Who is involved in the process and Where will the peer mediation take place?
Determine the nature of globalization : Determine the nature of globalization, cultures, and labor markets, and assess the impact on human Capital management - Give a succinct overview of the fictitious company merged with.
In contrast to the charitable remainder trust : In contrast to the charitable remainder trust, the charitable lead trust receives an income interest from the donor instead of a remainder interest. Which of the following statements concerning the advantages of the charitable lead trust created for ..
Which alternative is superior : Investment A costs $10,000 today and pays back $11,500 two years from now. Investment B costs $8000 today and pays back $4500 each year for two years. If an interest rate of 5% is used, which alternative is superior?
Present worth method and annual cost method : Machine A costs $17000 and has annual operating costs of $4500. Machine B costs $14000 and has an annual operating cost of $4800. Each machine has an economic life of 10 years. If the minimum required rate of return is 10 percent, compare the advanta..
What will be betas stock price the stock repurchase : Beta Industries has net income of $2,000,000, and it has 1,000,000 shares of common stock outstanding. The company's stock currently trades at $32 a share. Beta is considering a plan in which it will use available cash to repurchase 20% of its shares..
What is the p- value and what do you conclude : Instead of testing for some effect (for better or worse), suppose we want to test the claim that astemizole is effective in preventing motion sickness? What is the P- value, and what do you conclude?
What is the variance of this portfolio : Consider the following information: Rate of Return if State Occurs State of Probability of Economy State of Economy Stock A Stock B Stock C Boom 0.15 0.37 0.47 0.27 Good 0.45 0.22 0.18 0.11 Poor 0.35 − 0.04 − 0.07 − 0.05 Bust 0.05 − 0.18 − 0.22 − 0.0..

Reviews

Write a Review

 

Financial Management Questions & Answers

  Challenge of global promotion is not simply to communicate

The challenge of global promotion is not simply to communicate across culturally diverse country markets, but to also achieve integrated marketing messages among the different media forms used to reach targeted customers.

  Value of the option to wait if the applicable discount rate

Wilson's Antiques is considering a project that has an initial cost today of $10,000. The project has a two year life with cash inflows of $6,500 a year. Should Wilson's decide to wait one year to commence this project; the initial cost will increase..

  Decisions when applied to mutually exclusive projects

Given the following list of evaluation criteria, which one of these describes as being: a) easy to understand; b) may lead to several solutions; c) may lead to incorrect decisions when applied to mutually exclusive projects?

  Dividend is expected to grow at some constant rate

You are considering an investment in Keller Corp's stock, which is expected to pay a dividend of $1.50 a share at the end of the year (D1 = $1.50) has a beta of 0.9. The risk-free rate is 3.6%, and the market risk premium is 4.0%. Keller currently se..

  What is its effective rate and nominal rate

1) The nominal rate of Bank A is 8% and interests are compounded monthly, what is its effective rate? The effective rate of Bank B is 9.31% and interests are compounded four times a year, what is its nominal rate? Suppose the present value of a 2 yea..

  Exchange rate under the theory of interest parity condition

Explain how an increase in the interest rate in Europe would affect the interest rate in the United States and the dollar-euro exchange rate under the theory of Interest Parity Condition. What factors does this theory leave out?

  What amount did stephanie have to pay

Stephanie was involved in a car accident and rushed to the emergency room. She received stitches for a facial wound and treatment for a broken finger. Under Stephanie’s PPO plan, emergency room care at a network hospital is 80 percent covered after t..

  What is the market value of common stock

Ms. Manners Catering (MMC) has paid a constant $1.50 per share dividend to its common stockholders for the past 25 years. MMC expects the next dividend to increase at a constant rate equal to 7 percent per year into perpetuity. Investors require a 12..

  Portfolio composed of position in gold-cash borrowing

Consider a one year American call option on 100 ounces of gold with a strike of $1200 per ounce. The spot price per ounce of gold is $1210 and the annual financing rate is 4% on a continuously compounded basis. How would you hedge a short position in..

  A treasury bond with the longest maturity

A Treasury bond with the longest maturity (30 years) has an ask price quoted at 98:09. The coupon rate is 3.80 percent, paid semi-annually. What is the yield to maturity of this bond?

  Depth analysis of the performance of the company

Provide a brief summary of additional information which you would require in order to enable a more in depth analysis of the performance of the company and comment upon the financial position of JH Alarms plc in the light of the last three years' ..

  Questions regarding financial management

Explain what the information needs of various stakeholders are for their respective decision making needs.

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