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The Hansen Company is considering four mutually exclusive projects as follows:
a) Compute the NPV and IRR of each project and rank the investments from best to worst under each method. What factors are responsible for the differences in rankings between the two approaches?
b) Compute the PVI for each project and rank the alternatives. What are the implicit assumptions of the PVI method with respect to scale and duration of projects? When is it appropriate to use the PVI method?
c) If the projects are mutually exclusive, which should be accepted if they are independent? Why?
Joe aged 32 saves 4% of his salary at the end of each year for the next 20 years as a part of his retirement plan. Once the deposits are made, Joe let it accumalate interest till he retires. What is the value of the monthly withdraws
Yield to maturity (YTM) on debt issues with risk comparable to the Sonar Company is currently 9.9%. Sonar has issued debt two years ago with a YTM of 8.00%. Sonar's common stock beta is 1.15, and its tax rate is 38. The appropriate rate for Sonar to ..
A European call option and a European put option on a stock both have a strike price of $45 and expire in 6 months. Currently, the call price is $10 and the put price is $5 in the market. The risk-free rate is 2% per annum, and the current stock pric..
Calculate the NPV of the HomeNet project assuming a cost of capital of 10%, 12% and 14% and NPV of the FCF's of the HomeNet project assuming a cost of capital of 10% is $__.
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Consider two American put options on the same stock with the same maturity but different strike prices $40 and $50. Which of the following statements is correct?
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