FIN302 Investment Analysis

An investment advisor currently has two types of investments available for clients: a conservative investment A that pays 8% per year and investment B of higher risk that pays 14%. Clients may divide their investments between the two to achieve any total return desired between 8% and 14%. However, the higher the desired return, the higher the risk. How should each client listed in the table invest to achieve the desired return? Client 1 Client 2 Client 3 k $21000 $40000 $31000 k, Annual Return Desired $2460 $3860 $3740 k2 Total Investment How much money should Client 1 invest in each account to achieved the desired return? Amount in investment A: Amount in investment B: How much money should Client 2 invest in each account to achieved the desired return? Amount in investment A: Amount in investment B: How much money should Client 3 invest in each account to achieved the desired return? Amount in investment A: Amount in investment B:

Monique Gonzales just graduated and was hired by a new cybersecurity firm in Colorado. She needs to set up her retirement plan portfolio. Monique has completed the following payoff table for different investment options and estimated the potential profits that could be realized in one month. Monique can use the Hurwicz Criterion strategy to make her decision.Payoff Table   State of Nature Alternatives Good Economy Fair Economy Poor Economy Mutual Fund 1,0001,000 650650 270270 Stock Market 6,5006,500 4,7004,700 3,3003,300 CDs 1,5001,500 850850 710710 Bonds 650650 270270 205205   Step 2 of 2:  What is Monique’s potential payoff based on the the Hurwicz Criterion strategy and an α=0.35α=0.35?

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Monique Gonzales just graduated and was hired by a new cybersecurity firm in Colorado. She needs to set up her retirement plan portfolio, Monique has completed the following payoff table for different investment options and estimated the potential profits that could be realized in one month. Monique can use the Hurwicz Criterion strategy to make her decision. Alternatives Answer Mutual Fund Stock Market CDs ➤ Bonds Payoff Table Good Economy 900 5,500 1,800 550 Step 1 of 2: What should Monique's decision be using the Hurwicz Criterion strategy and an à = 0.55? O Mutual Fund OOO State of Nature Fair Economy Poor Economy O Stock Market O CDs 650 4,900 880 440 O Bonds 440 3,100 630 165 Tables Keypad Keyboard Shortcuts

The book I use for study: Principles of Managerial Finance [Global Edition] 16th Edition. Chad J. Zutter & Scott B. Smart Questions in image

An individual has $200,000 to invest. They are trying to maximize their return, but have given their investor advisor instruction on how to invest the money. The investment advisor has given them four different alternatives to invest in, they are listed in the table below along with their rates of return that is estimated. Investment-Type Hydro - Stock USA- Treasury Bills The mobile phone Co.-Bonds Texas Oil Co. - Stock Rate of Return 12% 1.25% 3.35% 1.75% The individual has the following parameters. 1. That no more than 50% can be invested in bonds. 2. That at least 25% is invested in treasury bills. 3. That at least 15% be invested in Texas Oil Co. 4. That all of the $200,000 is to be invested. Find the optimal investment mix and what is the project return in the next year?

quiz 8-1

Congratulations!!! You just landed your first job as a financial analyst for RB International. Your new boss is looking at an investment with the following timeline and cash flow. Including the initial outlay (which is at time 0), what is the present value of this investment assuming a 12% interest rate? Year 10 Cash Flows (1,000) O $658.31 O $89247 O $1.119.54 O $1.257.61 O $1.339.76 Year 1 395 Year 2 135 Year 3 920 Year 4 610 Year 5 1,475

As an analyst for a big technology company. The company has decided that this is the time to retire some of its debt. The company has decided the best way to do this is if us government bonds are used to match the principle as well as the interest payments on the liabilities chosen. Set up a strategy to accomplish this showing your work and discussion your result.  do you think this process is reasonable and why/whynot?   September 2019     $4,500,000 September 2020.    $5,050,000 September  2021.   $3,750,000 September 2022     $6,450,000   The Government debt  1.50% coupon due September 2019 1.75% coupon due September 2020 2.35% coupon due September 2020 2.6% coupon due September 2021

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Problem 1 It is now 2024. You have been assigned as a financial advisor of a Philippine start-up company They assigned you to value its existing business had they exited the market 6 years ago, meaning in 2018. Details of the company are as follows: Futher assume that the company will nat exist beyond 2023, meaning the going concem principle will not apply. Also assume that the client wants you to use the dividend discount model for this project. 2018 6,458,000.0 2019 7,412,000.0 2020 8,126,000.0 2022 8,941,000.0 9.457.000.0 42.0% 28.0% 30.0% 2021 2023 Sales Variable expenses Fixed expenses Tax Rate 10,025,000.0 40.0% 30.0% 44.0% 30.0% 30.0% 38.0% 40.0% 41.0% 30.0% 29.0% 21.0% 31.0% 25.0% 24.0% 25.0% After conducting a financial due diligence, you found that: 1.) 2019 sales are inclusive of a 250.000 sales invoice that were in transit as of EOY 2019, thus delivered to the client on 2020, with terms of FOB Shipping Point. 2.) 2020 sales excluded a contract signed for senvices worth…

Unit 8-1

RISK & RETURN AND PAYOFF TABLES TUTORIAL QUESTION 1 Mr. Nel, an entrepreneur who is currently 55 years old, took early retirement from his business which he had started 30 years ago. He still wants to be involved in investments to keep his mind occupied while on “permanent” holiday. While thinking about investment opportunities, he realised that one of his most consistent expenses is his cell phone bill. He has a MTN and a separate VODACOM contract which he pays monthly. He thought to himself, “Why not invest in the company that I am contributing to on a monthly basis.” He decided to conduct research on the two entities in order to assist him with his investment decision. The following information was gathered regarding the two companies: VODACOM Vodacom is a leading African communications group providing mobile communications and related services to 40.4 million customers. Its mobile network covers calls to a total population of approximately 182 million people across five…

Joe is a new investor and has been closely watching a company by the name of USA Ltd., a pharmaceutical company aiming to develop a coronavirus vaccine. Joe believes the following returns are possible in 2022 and has attached a probability to each potential outcome:     Probability Possible Return .20 185.00% .30 83.50% .30 -5.00% .20 -100.00% d) Joe is considering investing all his savings in buying shares in USA Ltd.  Explain to Joe why he should not do this by referring to the risk/return trade-off and what action Joe can take to reduce some of the risk

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13. Nu Things, Inc., is considering investing in a business venture with the following anticipated cash flow results: Assume MARR is 20 percent per year. Based on an internal rate of return analysis, (1) determine the investment's worth, (2) state whether or not your results indicate the investment should be undertaken, and (3) state the decision rule you used to arrive at this conclusion. WILEY O 382 CHAPTER 8 / RATE OF RETURN ANALYSIS EOY Cash Flow EOY Cash Flow ΕΟΥ Cash Flow -$70,000 7 $14,000 14 $7,000 1 $20,000 8 $13,000 15 $6,000 2 $19,000 9 $12,000 16 $5,000 3 $18,000 10 $11,000 17 $4,000 4 $17,000 11 $10,000 18 $3,000 5 $16,000 12 $9,000 19 $2,000 $15,000 13 $8,000 20 $1,000

(Expected rate of​ return)  James Fromholtz is considering whether to invest in a newly formed investment fund. The​ fund's investment objective is to acquire home mortgage securities at what it hopes will be bargain prices. The fund sponsor has suggested to James that the​ fund's performance will hinge on how the national economy performs in the coming year. ​ Specifically, he suggested the following possible​ outcomes:   LOADING... .   a.  Based on these potential​ outcomes, what is your estimate of the expected rate of return from this investment​ opportunity? b.  Would you be interested in making such an​ investment? Note that you lose all your money in one year if the economy collapses into the worst state or you double your money if the economy enters into a rapid expansion.   State of Economy Probability Fund Returns Rapid expansion and recovery 15​%   100​%   Modest growth 35​%   30​%   Continued recession 35​%   10​%   Falls into depression 15​%   −100​%

Alex is an investor and he wants to make an investment of $500,000 in to your VR/AR Headset manufacturing company which is operating really well in big cities in India and he wants to bring it into international market. To make sure risk to his investment is minimal. Alex wants advice on: a. The options available for investing in your business. b. The process Involved with each form of investment. c. The risks and benefits associated with each form of investment.

The "Your Business or Mine" is a manufacturer of high-altitude balloons in Waco, Texas. The company is planning to expand its operations in 2023 and is interested in securing a loan for Tex-Mex National Bank of Waco. Four banks were visited, and their interest rates for the 15-year loan were recorded. As someone knowledgeable about the engineering economy and capital investment justification, which bank would you recommend to this company?