What is the value of your education

Assignment Help Financial Management
Reference no: EM131235377

Going to your school has total additional and opportunity costs of $30,000 this year and up front.

With 90% probability, you are likely to graduate from your school. If you do not graduate, you have lost the entire sum.

Graduating from the school will increase your 40-year life time annual salary by roughly $5,000 per year, but more so when the stock market rate of return is high than when it is low.

For argument's sake, assume that your extra-income beta is 1.5. Assume the risk-free rate is 3%, and the equity premium is 5%. What is the value of your education?

Reference no: EM131235377

Questions Cloud

What is the forecast for january next year : The average demand for January has been 90, and the average annual demand has been 1800. Calculate the seasonal index for January. If the company forecasts annual demand next year at 2000 units, what is the forecast for January next year?
Discuss the importance of identifying norms within a team : Discuss the importance of identifying norms within a team. Why is clear communication considered an essential element during team development? Provide an example when you were a team member and the lack of communication caused significant problems..
Is the real world security market line a line : Is the real-world security market line a line? - Draw the security market line if the risk-free rate is 5% and the equity premium is 10%.
Calculate the forecast of actual demand for the next month : The old deseasonalized forecast is 100 units,α = 0.25 and the actual demand for the last month was 150 units. If the seasonal index for the last month is 1.2 and the next month is 0.8
What is the value of your education : Assume that your extra-income beta is 1.5. Assume the risk-free rate is 3%, and the equity premium is 5%. What is the value of your education?
Explain dynamics of how self esteem affects self efficacy : Explain the dynamics of how self esteem affects self efficacy. Provide an example of an internal or external force that impacts your self-efficacy.
Accepting requests on port : At company.com Inc. you have an email server that makes use of smtp. what can you use to check that it is accepting requests on port 25?
What will be the forecast sales for each month : If next year's demand is forecast at 1200 pairs of goggles, what will be the forecast sales for each month?
What are appropriate equity premium estimates : What are appropriate equity premium estimates?  -  What are not? What kind of reasoning are you relying on?- What is today's risk-free rate for a 1-year project?

Reviews

Write a Review

Financial Management Questions & Answers

  What is the company total market value of debt

Jiminy’s Cricket Farm issued a bond with 20 years to maturity and a semiannual coupon rate of 6 percent 2 years ago. The bond currently sells for 92 percent of its face value. The company’s tax rate is 40 percent. What is the company’s total book val..

  What is bobs gross income

What is Bob's GROSS INCOME from this information? This is an accounting question. Your client is Bob Jones. Bob, age 60 and single, has recently retired from IBM. He has $690,000 available in his 401(k) fund and he is thinking of using that money to ..

  Cash dividends without impairing its capital

Tangshan Mining has common stock at par of $200,000, paid in capital in excess of par of $400,000, and retained earnings of $280,000. In states where the firm’s legal capital is defined as the par value of common stock, the firm could pay out _______..

  Buy call option with low strike price

Suppose you are certain that the XYZ stock price will decrease in the near future. Which action should you take?

  According to the capital asset pricing model

Here are data on two companies. The T-bill rate is 5.8% and the market risk premium is 8.9%. Company $1 Discount Store Everything $5 Forecast return 16% 15% Standard deviation of returns 28% 30% Beta 1.3 1 What would be the fair return for each compa..

  Shareholders as the annual dividend

Catfish, Inc. just paid $1.86 to its shareholders as the annual dividend. Simultaneously, the company announced that future dividends will be increasing by 3.76 percent. If you require a rate of return of 9.89 percent, how much are you willing to pay..

  Treasury notes are an investment security issued

Treasury bills and Treasury notes are an investment security issued by the U.S. government. A Treasury bill matures within one year and investors typically roll over the matured Treasury bill and purchase another Treasury bill the same day. Treasury ..

  Receivable balance outstanding average age of the account

Capital Financial Corporation will lend 90 percent against account balances that have averaged 30 days or less; 80 percent for account balances between 31 and 40 days; and 70 percent for account balances between 41 and 45 days. Determine the maximum ..

  Compound annuity problem

(Compound annuity) What is the accumulated sum of each of the following streams of payments?

  Estimate the incremental operating cash flows attributable

Wilber Corporation is considering replacing a machine. The replacement will cut operating expenses by $24,000 per year for each of the 5 years the machine is expected to last. Although the old machine has a zero book value, it has a remaining useful ..

  Calculate the market price of the bond-compound interest

A $10,000 par value bond with coupons at 8%, convertible semi-annually, is being sold three years and four months before the bond matures. The bond is redeemable at $C, and purchase will yield 6% convertible semi-annually to the buyer. The price of t..

  What is the firm cost of preferred stock

During the last few years, Agile technologies has been too constrained by the high cost of capital to make many capital investments. Recently, though, money costs have been declining, and the company has decided to look seriously at a major expansion..

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