What is the expected value of return

Assignment Help Financial Management
Reference no: EM13942942

Under normal conditions (70% probability), Plan A will produce a $20,000 higher return than Plan B. Under tight money conditions (30% probability), Plan A will produce $100,000 less than Plan B. What is the expected value of return?

Reference no: EM13942942

Questions Cloud

Assume annual coupons-what is the present value : What is the present value of a $1,000 par corporate bond from the Burns Corp. with an annual coupon rate of 10% and 30 years to maturity when market rates on similar bonds are 8%? Assume annual coupons.
Pick the least-expensive car for your new delivery service : You are trying to pick the least-expensive car for your new delivery service. You have two choices: the Scion xA, which will cost $17,500 to purchase and which will have OCF of –$1,900 annually throughout the vehicle’s expected life of three years as..
Stock returns have covariance with the market portfolio : Neon Corporation’s stock returns have a covariance with the market portfolio of .0375. The standard deviation of the returns on the market portfolio is 20 percent, and the expected market risk premium is 9.1 percent. The expected unlevered cash flows..
What is the present value of the stock : A share of Ryan & Co. common stock is expected to pay a dividend of $2.40 ( D 1 ) at the end of the coming year. If the expected long-run growth rate for this stock is 6%, and if investors require a 18% rate of return, what is the present value of th..
What is the expected value of return : Under normal conditions (70% probability), Plan A will produce a $20,000 higher return than Plan B. Under tight money conditions (30% probability), Plan A will produce $100,000 less than Plan B. What is the expected value of return?
Determine total depreciation to be taken over useful life : Futabatei Enterprises purchased a delivery truck on January 1, 2014, at a cost of $44,550. The truck has a useful life of 7 years with an estimated salvage value of $9,900. The straight-line method is used for book purposes. Determine the total depre..
What is their yield to maturity : ABC Corp.'s bonds currently sell for $1,180 and have a par value of $1,000. They pay a $50 annual coupon and have a 15-year maturity, but they can be called in 5 years at $1,100. What is their yield to maturity (YTM)?
Value of one-year european put option with a strike price : A stock price is currently $100. Over each of the next two six-month periods it is expected to go up by 10% or down by 10%. The risk-free interest rate is 8% per annum with continuous compounding. What is the value of a one-year European put option w..
Determine the market value of the bond : A corporate bond has a face value of $1000 with maturity date 20 years from today. The bond pays interest semi annually at a rate of 8% per year based on the face value. The interest rate paid on similar corporate bonds has decreased to a current rat..

Reviews

Write a Review

Financial Management Questions & Answers

  Cash referencing using least example of assets-liabilities

Contrast sources and uses of cash referencing using at least two examples of assets and liabilities (four total). Provide examples of how cash is used or provided depending on whether it is categorized as an asset or liability.

  What would the risk-free rate have to be for the two stocks

Stock Y has a beta of 1.35 and an expected return of 13 percent. Stock Z has a beta of 0.8 and an expected return of 10.5 percent. Required: What would the risk-free rate have to be for the two stocks to be correctly priced relative to each other?

  Prepare an income statement

Prepare an income statement, statement of owners equity and balance sheet for Green Day Co. as of 12-31 . . Sales 7,387,500.00 Salary Expense 450,000.00 Cash 700,000.00 Accts Receivable 500,000.00 Equipment 420,000.00 Accumulated Depreciation Equipme..

  Calculating loan payments

You want to buy a new sports coupe for $74,500, and the finance office at the dealership has quoted you an APR of 5.6 percent for a 48 month loan to buy the car. What will your monthly payments be? What is the effective annual rate on this loan?

  Earn higher rate of return on your investments

Which of the following conclusions would be true if you earn a higher rate of return on your investments? If the interest rate is positive, then the future value of an annuity due will be greater than the future value of an ordinary annuity.

  How might immediate corrective action have been used

What type of control - feedforward, concurrent, or feedback - do you think would be most important in this situation and how might immediate corrective action have been used in this situation

  Expected cash inflows

Project K costs $50,000, its expected cash inflows are $14,000 per year for 6 years, and its WACC is 10%. What is the project's NPV?  Project K costs $53,364.04, its expected cash inflows are $11,000 per year for 10 years, and its WACC is 13%. What i..

  The amount of the net new equity raised during the year

A firm has net income for the year of $32,600. At the beginning of the year, the firm had common stock of $88,000, paid-in surplus of $154,000, and retained earnings of $29,000. At the end of the year, the firm had common stock of $103,000, paid-in s..

  What is dividend yield and what is the intrinsic value

ABC Corp. has just paid a dividend of $0.26. ABC has an annual required return of 12%. If dividends are annual and expected to be constant, what is the intrinsic value (fair price) of ABC stock? What is ABC's dividend yield? A different analyst think..

  Brown ltd operates outdoor amusement centres in a number of

brown ltd operates outdoor amusement centres in a number of country towns. the company has decided to build another

  Determine the net effect on jenkins pretax profits

The firm's required pretax return on receivables investments is 20 percent. Determine the net effect on Jenkins' pretax profits of offering a 1 percent cash discount.

  The separation of ownership and control describes

The separation of ownership and control describes _________

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