### Compute expected return for each game project

Assignment Help Financial Management
##### Reference no: EM131352633

Consider an economy with a large number of potential online game providers. The provider lacks the funds to start their projects. There is an equal number of investors who have the funds but no desire to create online games. Each investor has 50 goods to invest. Each online game requires 200 goods to create. Assume that 25 percent of the online game projects fail and return zero goods to the investor. The monitoring cost is two goods per failed project. Assume that bank operates costlessly in this economy. Also assume there are no barriers to entry in the banking industry.

a. Compute the expected return for each game project for the bank

b. What return will the bank offer a depositor?

#### Questions Cloud

 Show that v contains an additive identity : Show that given any two vectors in V, the sum of these vectors is also an element of y.- Show that V contains an additive identity. Prove the convolution theorem for the fourier transform : Prove Parseval's theorem for the Fourier transform.- Prove the modulation property of the Fourier transform.- Prove the convolution theorem for the Fourier transform. What is inbreeding depression : What is inbreeding depression? Please give some examples of inbreeding depression in dogs and cats? Describe the elements of a successful implementation plan : Describe the elements of a successful implementation plan. Discuss how you would insure these elements were communicated to the key stakeholder for the implementation plan. Compute expected return for each game project : Consider an economy with a large number of potential online game providers. The provider lacks the funds to start their projects. There is an equal number of investors who have the funds but no desire to create online games. Compute the expected retu.. Why the scattering differential cross section is isotropic : Explain why the scattering differential cross section is isotropic if only the 1 = 0 state participates in the interaction that produces the scattering. Combine all 16 numbers into a single vector : Transform each row separately using an eight-point DCT. Plot the resulting 16 transform coefficients.- Combine all 16 numbers into a single vector and transform it using a 16-point DCT. Plot the 16 transform coefficients. Find the price of the european version of option : In a two-period CRR model with r =1% per period, S(0)=100, u =1.02, and d =0.98, consider an option that expires after two periods and pays the value of the squared stock price, S2(t), if the stock price S(t) is higher than \$100.00 when the option is.. Calculate the weighted average cost of capital : Calculate the Weighted Average Cost of Capital (WACC). Calculate the NPV (Net Present Value) of the project, using the WACC calculated in (b) above as the discount rate.

### Write a Review

#### Average accounting return method of project analysis

Which one of these is strength of the average accounting return method of project analysis?

#### How is equilibrium interest rate determined in bond market

How is the equilibrium interest rate determined in the bond market? Explain why the interest rate will move toward equilibrium if it is temporarily above or below the equilibrium rate.

#### Equipment will lead to cash flows

Muncy, Inc., is looking to add a new machine at a cost of \$4,133,250. The company expects this equipment will lead to cash flows of \$819,822, \$863,275, \$937,250, \$1,020,110, \$1,212,960, and \$1,225,000 over the next six years. If the appropriate disco..

#### What is the expected percentage change in the share price

The owner of ABC Corp. wishes to take her stock public for the first time by selling 10 million shares. The underwriter determines that the true value will be \$30 with probability .4 and \$10 with probability .6.  what is the expected percentage chang..

#### Firm achieve in order to meet its growth rate goal

Fulkerson Manufacturing wishes to maintain a sustainable growth rate of 9.25 percent a year, a debt–equity ratio of .50, and a dividend payout ratio of 27.5 percent. The ratio of total assets to sales is constant at 1.25. What profit margin must the ..

#### Maximal share price at which you will invest in venture

Your investment strategy is to maximize expected return but with a risk level (standard deviation) that does not exceed 15%. Since you are a CAPM believer, you hold a combination of the market portfolio and risk free asset. In the public offering NAS..

#### Define cash and cash equivalent in the context of accounting

Define cash and cash equivalent in the context of accounting. For one specific organization, indicate the examples of items that should be included and excluded?

#### Main cost of the operation of commercial banks

Which of the following is the main cost of the operation of commercial banks? a.) cost of labor b.) interest the banks pay on their borrowings c.) cost of materials d.) cost of energy

#### What will market price of security be if its beta doubles

The market price of a security is \$44. Its expected rate of return is 7%. The risk-free rate is 4%, and the market risk premium is 7%. What will the market price of the security be if its beta doubles?

#### Debt issue outstanding

Avicorp has a \$13.2 million debt issue outstanding, with a 6.2% coupon rate. The debt has semiannual coupons, the next coupon is due in six months, and the debt matures in five years. It is currently priced at 93% of par value.

#### Find the present value of the ordinary annuities

Find the present value of the following ordinary annuities a. \$4000 per year for 10 years at 10% b. \$2000 per year for 5 years at 5% c. \$4000 per year for 5 years at 0% Now rework parts a, b, and c assuming that payments are made at the beginning of ..

#### Price of the bond using duration approximation

Calculate the duration of a 4-year, 4 percent coupon bond with a face value of \$1000. Assume that the yield on this bond is 5 percent.  If the interest rates decrease 10 basis points, what would be the approximate change in the price of the bond usin..