A firm has three investment opportunities. Each costs $1,000, and the firm's cost of capital is 10 percent. The cash inflow of each investment is as follows: Cash Inflow A B C Year 1 300 500 100 2 300 400 200 3 300 200 400 4 300 100 500 a. If the net present value method is used,
In January, 1950, Billy Bob bought 100 shares of Stock in Ben's Barbeque, Inc. for $37.50 per share. He sold them in January, 2004 for a total of $9,715.02. What is Billy Bob's annual rate of return?
(See attached file for full problem descriptions)
NPV versus IRR. Here are the cash flows for two mutually exclusive projects: Project C0 C1 C2 C3 A -$20,000 +$8,000 +$8,000 +$8,000 B -$20,000 0 0
Can you tell me which statement is corrrect (if any) and why? 1. Actual aggregate expenditures does not always equal real GDP. 2. Planned investment exceeds actual investment when real GDP is greater than aggregate planned expenditures. 3. Actual investment exceeds planned investment when real GDP is less than aggregate
Calculate the totals change in a year's GDP: You win $25,000 in your state lottery. Ever the entrepreneur, you decide to open a Ping Pong ball washing service, buying $15,000 worth of equipment fro Spiffy Ball Ltd, Of Hong Kong and $10,000 from Ball Kleen of Atlanta.
(See attached file for full problem description) --- HYPOTHETICAL INCOME DATA (BILLIONS OF DOLLARS) (NET EXPORTS IS ASSUMED TO BE ZERO) Y (GDP) C I G $0 $100 $80 $60 100 175 80 60 200 250 80 60 300 325 80 60 400 400 80 60 QUESTIONS 1. What
The following table gives the anticipated one-year rates of return from a certain investment and their associated probabilities. Rate of Return X, % Probability, Pi -20 0.10 -10 0.15 10 0.45 25 0.25 30 0.05 a) Calculate the expected rate of return, E(X). b) Calculate the Variance and the Standard deviation of the
Suppose you make a $2,000 investment in a risky venture. There is a 60% chance that the payoff from the investment will be $5,000, a 15% chance that you will just get your money back, and a 25% chance that you will receive nothing at all from your investment. a. Find the expected value of the payoff from your investment of $2
GDP/Equilibrium and MPC questions: --- C = 250 Billion +. 80GDP Please use equation above for following questions: 1. If the planned investment is $200 billion, the equilibrium level of GDP is: 2. If the equilibrium is $2000 billion, autonomous investment is: ------------------------------------------------------
Personal Taxes....................................................... $40 Social Secutity Contributions............................15 Indirect Businesss Taxes.......................................... 20 Corporate Income Taxes.......................................40 Transfer payments................................
Start-up Industries is a new firm that has raised $200 million by selling shares of stock. Management plans to earn a 24 percent rate of return on equity, which is more than the 15 percent rate of return available on comparable-risk investments. Half of all earnings will be reinvested in the firm.
The following problem is an example of a firm going public and IPOs. Can you provide an example or hints to the solution. (See attached file for full problem description) Having heard about IPO underpricing, I put in an order to my broker for 1,000 shares of every IPO he can get me. After 3 months, my investment record
Determine the present value of the following. (use formulas or charts) a. An investment which iwll return $10,000 in 10 yrs; similar investments are generating an 8% return. b. $10,000 to be received every year, for the next five years. Expected interest rate for similar investment is 10% c. Is "a" an annuity problem or
Hi, please provide me with a detailed solution, so i know how u came up with the answer to the problem On March 31, 2005, Clique Corporation purchases 250,000 shares of Carborundum Company's common stock for $67 per share. The 250,000 shares represent 16% of Carborundum's outstanding shares. On June 30, 2005, the marke
How long must a temporary warehouse last to be a profitable investment if it costs $19,000 to build, has annual maintenance and operating expenses of $480, provides storage space revenue of $3900 per year, and if the company MARR is 10%?
Step-by-step solution in equation form for all cost analysis sections 1. What sum of money will be accumulated in 10 years if: a) $100 is invested at the end of each month at a 15% rate of return compounded annually. b) The same investment as above for a 3% rate of return compounded monthly. What is the effective rate?
It was stated that under Weak-Form EMH you cannot design an investment strategy which "beats the market" (gives you higher return than average market return, given the riskiness), if such a strategy is based only on analyzing past price movements. Is it possible to design an investment strategy, based on past price movements, w
The Bureau of Economic Analysis provided data for real private nonresidential fixed investment in table form at www.bea.gov. Access the BEA interactively and select National Income and Product Account Tables. Find Table 5.4 "Private Fixed Investment by Type." Has recent real private nonresidential fixed investment been volatil
Assume the required rate of return increases to 20%. The net present value of the investment would a. increase b. decrease c. stay the same d. become negative e. both "b" and "d", above.
(Expenditure Approach to GDP) Given the following annual information about a hypothetical country, answer questions a through d. Billions of Dollars Personal consumption expenditures $200 Personal Taxes 50 Exports 30 Depreciation 10 Government Purchases 50 Gross private domestic investment 40 Imports 40 Governm
The expansion of the government debt could result in: A) a decline in savings. B) an increase in interest rates. C) a decline in investment. D) a reduction in the capital stock. E) all of the above.
The assets of a particular investment fund are: Stock A with an Investment of $200,000 and a beta of 1.50. Stock B with an Investment of $300,000 and a beta of -0.50. Stock C with an Investment of $500,000 and a beta of 1.25. Stock D with an Investment of $1,000,000 and a beta of 0.75. The required market rate of return is
Classify the various categories of 'gross private domestic investment'. Explain what is meant by each briefly. (The Prof. said, " I am not referring to 'net investment' and 'depreciation' when I say various categories.)