In a private equity buyout, you will eventually need to exit, and the operational changes will hardly be completely "done." What criteria would you use to know when it is time to exit? (Rank these from most important to least important.) State of the macro environment State of the market Item Bank Realized return on the investment to date Incremental return on remaining initiatives D

In a private equity buyout, you will eventually need to exit, and the operational changes will hardly be completely "done." What criteria would you use to know when it is time to exit? (Rank these from most important to least important.) State of the macro environment State of the market Item Bank Realized return on the investment to date Incremental return on remaining initiatives D

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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True or False: In solving a capital budgeting problem involving investment opportunities that are divisible (i.e., you can invest in portions of the opportunities instead of “all or nothing”), you rank the opportunities on thebasis of internal rate of return and add to the portfolio opportunities andfractions of opportunities, beginning with the largest internal rate of return,until “the investment bucket is filled.”
why is knowledge of the money market important for carrying out value maximizing working capital short term management?why are opportunity cost of not taking account the risk return trade off of the various short term instruments?
i Explain how wrong calculation of the cost of capital of a project leads toincorrect choice of a project. ii Explain the superiority of the Security Market Line (SML) approach ascompared to the dividend valuation model. iii A company is faced with the choice of one of two investment opportunities Aand B. The initial cost of each is Rs.200,000 and their estimated cash flows areas follows.Year Cash Flows (Rs.) – A Cash Flows (Rs.)- B1 200,000 40,0002 240,000 60,000Assuming a cost of capital of 7% calculate (year 1: .935; year 2: .873)a. NPVb. The yield rate of each projectc. Say which project you would select
Which of the following is NOT a primary consideration for whether a buyout fund should exit an investment? a. The 100-day plan was completed successfully b. State of the market c. Realized return on the investment to date d. Incremental return on remaining initiatives
The profitability index O will never be greater than 1. O does not take into account the discounted cash flows. O allows comparison of the relative desirability of projects that require differing initial investments. O is calculated by dividing total cash flows by the initial investment.
Q. A positive NPV forecast for a new project is reliable only if it is based on Multiple Choices: - forecasts of cash flows. - identifiable sources of economic rents. - Michael Porter's theories. - results from Monte Carlo analysis.
Please help me correctly pls
Which of the following statements is not correct about the capital allocation line (CAL)? Question options: Capital allocation line using the market index portfolio as the risky asset is called the capital market line (CML). One can achieve the maximum possible return along the capital allocation line by investing 100% in the risky asset. It is a plot of risk-return combinations available by varying allocation between risky and risk-free assets. The slope of the capital allocation line is the Sharpe ratio.
The relationship between WACC and investors' required rates of return The required rate of return of an investor is the rate of return that an investor demands to purchase a firm’s stocks or bonds and thus provide funds for capital investment. Therefore, required returns from the investors’ point of view correspond to the required returns or the weighted average cost of capital (WACC) from the firm’s point of view. Indicate in the following table whether each of the statements about WACC and the required rates of return of investors is true or false. Statement True False Flotation costs increase the cost of newly issued stock compared to the cost of the firm’s existing, or already outstanding, common stock or retained earnings. The firm’s cost of debt is what an investor is willing to pay for the firm’s stock before considering flotation costs. The amount that an investor is willing to pay for a firm’s bonds is inversely related to the…
A disadvantage of using the accounting rate of return to evaluate investment alternatives is that Group of answer choices A. It is superior to IRR. B. When net incomes vary from year to year, the ARR will also vary across years, making the project seem desirable in one year and not another. C. It considers the time value of money. D. It is easy to understand and it allows comparison or projects. E. Using ARR has no disadvantages.
What is the relationship between return on capital investment and the risk associated with the anticipated sales of the product for which a new method will be used? Discuss.

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