Estimate net current value of investment under risk rate

Assignment Help Business Economics

Reference no: EM1367585

Q. An industry is considering an investment project that is expected to generate a net cash flow of Rs. 200,000 per year for three years and initial cost of investment is Rs. 480,000. Risk free discount rate is 10 percent and perceived risk premium is 4 percent.

(i) Estimate net Current value of investment under risk free interest rate and with risk adjusted discount rate.

(ii) State where industry would undertake investment under two scenarios

(iii) If manager regarded certain sum of Rs. 186,000 as equivalent to risky net cash flow, Estimate certainty-equivalent coefficient

(iv) Would industry undertake investment under certainty-equivalent approach?

Reference no: EM1367585

Questions Cloud

Find the velocity of toyota prius relative to vw passat : A Toyota Prius driving north at 61 and a VW Passat driving south at 42 are on the same road heading toward each other.

Spirituality in health situations : Recognizing that being a healthcare provider is a ministry of service, how can a healthcare provider prepare to address spirituality in health situations for each of the following groups

Illustrate what is point cost elasticity of demand : Illustrate what is point cost elasticity of demand with respect to company f for values of independent variable.

Democratic theory and business ethics : Discuss how the rights of those in the public sector differ from those in the private sector, and how it affects overall public sector productivity.

Estimate net current value of investment under risk rate : Estimate net Current value of investment under risk free interest rate and with risk adjusted discount rate.

What is the radius of circle : The car has just achieved double its initial velocity when the driver spots a police officer behind him and applies the brakes. The car then slows down, coming to rest at the stoplight ahead.

Identify consistent with risk averse : Identify each as being consistent with risk averse, risk neutral or risk seeking behavior in investment project selection. Explain.

Perspective of buddhism-hinduism and judaism faiths : Compare and contrast the philosophy of providing care from the perspective of Buddhism, Hinduism, and Judaism faiths with that of the Christian perspective.

Determine actual maximum channel capacity : Determine the theoretical maximum channel capacity (Kbps) of traditional telephone lines (POTS)? Will that be the actual maximum channel capacity?

User Account

All Pages