Assume that you sell $100,000 of a 10 percent shareholding with a payment of the future one year from now is $1.5 million. A. Explain what is meant by implied return for the owner of 10 percent? (5 points) B. What is the present value of the total $1.5 million, using the implied return of about part A? (5 points) C. What is 10 percent of the value specified in Part B? (5 points) D. Which is more profitable : You grow $100,000 at 50 percent to $150,000, provided that 10 percent is off $1.5 million, or a $1.5 million discount at 50 percent to earn $1 million provided that $100,000 is 10 percent ofcurrent value? (10 points)
Assume that you sell $100,000 of a 10 percent shareholding with a payment of the future one year from now is $1.5 million. A. Explain what is meant by implied return for the owner of 10 percent? (5 points) B. What is the present value of the total $1.5 million, using the implied return of about part A? (5 points) C. What is 10 percent of the value specified in Part B? (5 points) D. Which is more profitable : You grow $100,000 at 50 percent to $150,000, provided that 10 percent is off $1.5 million, or a $1.5 million discount at 50 percent to earn $1 million provided that $100,000 is 10 percent ofcurrent value? (10 points)
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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Assume that you sell $100,000 of a 10 percent shareholding with a payment of
the future one year from now is $1.5 million.
A. Explain what is meant by implied return for the owner of 10 percent? (5 points)
B. What is the present value of the total $1.5 million, using the implied return of
about part A? (5 points)
C. What is 10 percent of the value specified in Part B? (5 points)
D. Which is more profitable : You grow $100,000 at 50 percent to $150,000, provided that 10 percent is off $1.5 million, or a $1.5 million discount at 50 percent to earn $1 million provided that $100,000 is 10 percent ofcurrent value? (10 points)
Transcribed Image Text:Assume that you sell $100,000 of a 10 percent shareholding with a payment of
the future one year from now is $1.5 million.
A. Explain what is meant by implied return for the owner of 10 percent? (5 points)
B. What is the present value of the total $1.5 million, using the implied return of
about part A? (5 points)
C. What is 10 percent of the value specified in Part B? (5 points)
D. Which is more profitable : You grow $100,000 at 50 percent to $150,000, provided that 10 percent is
off $1.5 million, or a $1.5 million discount at 50 percent to earn $1 million provided that $100,000 is 10
percent ofcurrent value? (10 points)
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