Less risky than capital budgeting cash flows

Assignment Help Financial Management
Reference no: EM13894217

You probably noticed that lease analysis seems a bit like capital budgeting analysis, because the cash flows are estimated over the life of the project or lease. The present value of the cash flows dictates the manager's decision. Are cash flows that are estimated in lease analysis more or less risky than capital budgeting cash flows?

-More Risky?

-less risky?

Reference no: EM13894217

Questions Cloud

Forward premium for natural gas : Suppose there is 9-month forward premium for natural gas of 10% i.e. the forward price is 10% higher than the spot price. The risk-free rate 6% and the storage cost is paid continuously at 8%. What is the convenience yield for 9-month natural gas con..
What is current spot price of gold if lease rate on contract : What is the current spot price of gold if the lease rate on the contract is 1.5%, the risk-free rate is 6%, and the 1-year forward price is $313.81?
What is the annualized lease rate for this copper contract : The spot price of copper is $70 per ounce. The 9-month forward price is $72.13. The continuously compounded risk-free rate is 5%. What is the annualized lease rate for this copper contract?
Involved with the mergers and acquisitions of firms : Investment Bankers often become involved with the mergers and acquisitions of firms. So, why might a firm need an investment banking firm to both initiate and complete either the merger or acquisition of a firm...and, tell us what the difference is b..
Less risky than capital budgeting cash flows : You probably noticed that lease analysis seems a bit like capital budgeting analysis, because the cash flows are estimated over the life of the project or lease. The present value of the cash flows dictates the manager's decision. Are cash flows that..
Sometimes transaction costs : Sometimes transaction costs (e.g. related to environment) eat away at or completely erase gains in efficiency. How can you reduce them? What are strategies to use?
Concerned with the price the trade crossed : If you needed to trade immediately and were not concerned with the price the trade "crossed" (or traded) at, nor were you particularly concerned with how much the implicit cost of liquidity happened to be, and you were not   concerned with how far pr..
Elizabeth is offered to buy a financial security : Elizabeth is offered to buy a financial security that guarantees to pay her $10 every 2 years forever. The annual interest rate is 8%. How much would she pay for it today if the first payment will be received today? How much would she pay for it toda..
About the valuation-options : The following information refers to six-month call option on the stock of XYZ, Inc. What is the intrinsic value of the option? What is the option's time premium at this price?

Reviews

Write a Review

Financial Management Questions & Answers

  What is the expected capital gains yield

Hooper Printing Inc. has bonds outstanding with 19 years left to maturity. The bonds have an 7% annual coupon rate and were issued 1 year ago at their par value of $1,000. However, due to changes in interest rates, the bond's market price has fallen ..

  Well-diversified portfolio-data for asset and the market

You have developed the following data for Asset “A” and the Market. Assume that the four states of nature include all possible states: State Return on Asset A Return on the Market 1 -15 -5 2 5 0 3 20 15 4 30 20 The rate on T-Bills is 2 percent. Given..

  How it is possible for a firm to report rising ni each year

Explain how it is possible for a firm to report rising NI each year yet continue to need more working capital financing from a bank.

  Not-for profit nursing home has total expenses

A not-for profit nursing home has total expenses of $20 million. Sales tax in the state is 7%. Expenses are broken down into salaries ($12 million), supplies ($6 million), and pharmacy ($2 million). The benefit received by the nursing home from the s..

  Compute the book value per share

We know the following about Bob & Co. Total assets are $1000m, E is $700m, cash is $500m and the # of shares is 1m. We estimate that the market value of equity is 2 times the book value of it. Finally, a fire sale of the firm would bring 70% of the v..

  What arbitrage opportunity is available

Suppose that Quincy college offers a risk-free interest rate of 2,5% on both saving and loans and stone hill bank offers a risk-interest of 3% on both saving and loans. what arbitrage opportunity is available?

  Discuss the elements of zero-base budgeting

Discuss the elements of zero-base budgeting. How does it work? What are the advantages and disadvantages of zero-base budgeting? Provide a real-life example of a user of this type of budgeting.

  Calculate the dividend payout ratio

Johnson Products earned $3.10 per share last year and it paid out $.75 dividend. The company’s ROE is 16%. Calculate the dividend payout ratio; Calculate the sustainable growth rate of the company.

  What is the net cash flow from investing activities

What is the net cash flow from operating activities? What is the net cash flow from investing activities? What is the net cash flow from financing activities? What is the change in cash?

  Differences in top down and bottom up sales forecast methods

Describe the differences between the top down and the bottom up sales forecast methods. Describe advantages and disadvantages of each. Do you think one approach is likely to be more accurate than the other? Explain.

  Yield to maturity of bond

Consider a 20 year, $1000 bond with a coupon rate of 9% and quarterly coupons. By looking at Bloomberg you can see that this bond has most recently traded at a price of $1462.62. Give two numbers (a,b) such that the yield to maturity of bond is betwe..

  Given that you are rolling your services out in a foreign

given that you are rolling your services out in a foreign country there will be a need to learn from other companies

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