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1.A generous university benefactor has agreed to donate a large amount of money for student scholarships. The money can be provided in one lump-sum of $10mln, or in parts, where $5.5mln can be provided in year 1, and another $5.5mln can be provided in year 2. Assuming the opportunity interest rate is 6%, what is the present value of the second alternative? Which of the two alternatives should be chosen and why? How would your decision change if the opportunity interest rate was 12%? Please, show all your calculations.2.An angel investor is considering investing in one of two start-up businesses and is evaluating the expected returns along with the risk of each option in order to choose the better alternative.
a) Apply the coefficient-of-variation decision criterion to these alternatives to find out which is preferred by the angel investor, assuming that he/she is risk-averse.b) Apply the maximin criterion, assuming that the worst outcome in Business 1 is to lose $5,000, whereas the worst outcome in Business 2 is to make only $5,000 in profit.c) If you were the angel investor, what is your certainty equivalent for these two projects? Are you risk-averse, risk-neutral?
How much would they have been worth if they paid interest at a rate more like that paid during the 1970s and 80's, say 7%?
What is the standard deviation of a position that is long 5 units of the spot asset and is hedged by shorting 4 units of futures?
Telecom has 1.0 million common shares and 1,000,000 shares of $1.75 preferred stock outstanding. Total revenues for Telecom Cable are $14.2 million. If Telecom has a marginal tax rate of 40%.
klottier amp walson inc. plans to upgrade 1 of the pieces of equipment in its factory. the current equipment has been
Mitech Corp's stock price has been growing at approximately 8% for several years, and is now $30. Based on past growth rate performance, what would you expect the stocks price to be in five years?
Katz is an all equity development company that has 36,000 shares of stock outstanding at a market price of $25 a share. The firm's earnings before interest and taxes are $29,000.
A tax-exempt bond was recently issued at an annual 12% coupon rate and matures twenty years from today. The par value of the bond is $1,000.
Find the amount to which $500 invested today will grow to in five years under each of the following conditions:
Also, assuming the central bank maintains its existing inflation target, illustrate the impact on the monetary policy reaction function and on equilibrium inflation and output both in the short run and in the long run.
The financial statements present a company to the public in financial terms. (1) Which financial statement requires input from the Income Statement and Statement of Retained Earnings and (2) explain what information this financial statement provid..
Consider a project with an initial cost of $1,000 in Year 0, in which 3 scenarios can occur, with the probabilities and cash flows (CF) as shown in the table. The appropriate cost of capital is 11.5%.
Compute the future value of income
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