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A project requires an immediate outflow of cash of R400,000 in return for the following probable cash flows: State of Economy Probability End of year 1 (Rands) End of year 2 (Rands) Recession 0.3 100,000 150,000 Growth 0.5 300,000 350,000 Boom 0.2 500,000 550,000 Assume that the state of the economy will be the same in the second year as in the first. The required rate of return is 8 per cent. There is no tax or inflation.
Required:
1. Calculate the expected NPV.
2. Calculate the standard deviation of NPV and the coefficient of variance of the NPV. Interpret these results taking into consideration of the state of economy.
Junkman's Warehouse and Storage Company has an unusual bond outstanding with exactly 10 years remaining until maturity and a face value of $1,000. The bond is unusual because the annual coupon payments remaining are $50 for the next five years and $1..
Ashley is planning to attend college when she graduates from high school 7 years from now. She anticipates that she will need $100,000 at the beginning of each college year to pay for tuition and fees and have some spending money. Will there be enoug..
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What price should the futures be?
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Why might Buffett have chosen to invest in the preferred stock issued by these firms rather than their common stock?
Suppose that today's stock price is $63.43. If the required rate on equity is 13.5% and the growth rate is 4.4%, compute the expected dividend (i.e. compute D1) Note: Enter your answer rounded off to two decimal points.
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If you decide to invest in mutual funds, what types of funds will you select? Why?- Why might mutual funds be more appropriate investments for the Sampsons than individual stocks or bonds?
what forward contract would you seek to enter into to lock in current interest rates?
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