An automobile company is going to launch a new car inthe coming month which will directly going to impacton its share price. As per the research done by themarketing and financial team, if car launch is successful,the revenue will increase and share price will be $4,500and if car launch is not successful, the revenue will dropand share price will be $3,000. On the day of carlaunch, the company's share price is trading at $3,900.What are the investor's expectations of the company'ssuccess in the car launch and profitability? Answerchoices: a. 86.67% b. 66.67% c. 60.00% d. 100.00%

Here,SharePrice in case of success is $4,500Share Price in case of failure is $3,000Current Share…

Answered: An automobile company is going to…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Similar questions

You are planning to manufacture a new cordless induction food processor. As this is new technology, it will cost you $4 million to develop and you plan to manufacture for three years (3Y straight line depreciation). Due to the rapidly changing nature of induction technology you do not wish to plan any more than three years ahead. Competition is fierce and you have estimated your annual expenses and sales etc as per the following with estimates for changes in good or bad scenarios. a. Market size b. Market share Unit Price 70,000 ± 7% 0.30 ± 10% $500 ± 5% c. d. Variable c.p.u. 28% e. Fixed costs f. Taxes Your cost of capital is 6%. $270 ± 12% $400,000 ± 13% Create a table of estimated and pessimistic values for each element. What is the three-year NPV of the project with all values pessimistic? Do you think that this should go ahead and why?
Kate is considering expanding and bringing in several employees. To do this she will need a larger facility and to purchase more equipment. Which means additional financing. Answer this: look at the financial statements as if you were a banker considering her for a loan comment on your findings and use calculations to support your answer.
Bramell Park is an amusement park with an entrance fee that allows unlimited rides. Last year, the company sold 99,000 one-day admission tickets with an average price of $136 and 35,500 three-day admission tickets with an average price of $302. The park management expects one-day admission ticket volume to decrease by 12 percent and three-day admission ticket volume to increase by 4 percent. At the same time, increased competition is expected to result in one-day ticket prices that are 15 percent lower than the current level and three-day ticket prices that are 10 percent lower than the current price. Required: Estimate admission revenues for Bramell Park for the coming year. Note: Do not round your intermediate calculations. Products One-day tickets Three-day tickets Revenues
A new company, is being established to manufacture and sell an electronic tracking device:the Trackit. The owners are excited about the future profits that the business will generate. They have forecast that sales will grow to 2,600 Trackits per month within five months andwill be at that level for the remainder of the first year.The owners will invest a total of $250,000 in cash on the first day of operations (that is thefirst day of July). They will also transfer non-current assets into the company.Extracts from the company’s business plan are shown below.SalesThe forecast sales for the first five months are:Month Trackits (units)July 1,000August 1,500September 2,000October 2,400November 2,600The selling price has been set at $140 per Trackit. Sales receiptsSales will be mainly through large retail outlets. The pattern for the receipt of payment isexpected to be as follows:Time of payment % of sales…
Please show all work and explain each step. DO NOT use Excel.

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