Her attention is on the stock market and there is a share, Bolton Machinery, that looks promising and is behaving as a normal asset on the market. The price is currently set at £150 and there are three scenarios; Good and then the sale of the share will be at £180 and dividend at £10 Normal with a sales price of £165 and a dividend at £5 followed by Bad when the share will be sold at a loss of £30 and no dividend will be received. The probability for good is 25% and normal 40%. Make an evaluation of this

A strategy for making decisions is called expected monetary value (EMV) contribution, and it is used…

Answered: Make an evaluation of this

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Note:- • Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. • Answer completely. • You will get up vote for sure.
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Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.

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	If then Bolton Machinery is behaving like a normal asset Durability Plc is the opposite.
	The price for the share is currently at £250 and the probabilities for the three market
	conditions are the same as for Bolton Machinery. However if conditions are good
	the sale price will be at £140 and a dividend at £3, bad will give a sale price of £320
	and a dividend of 14. For normal the gain will be £10 when sold and deliver a dividend
	of 7.
	Make an evaluation of this.


Her attention is on the stock market and
there is a share, Bolton Machinery, that looks promising and is behaving as a normal
asset on the market. The price is currently set at £150 and there are three scenarios;
Good and then the sale of the share will be at £180 and dividend at £10
Normal with a sales price of £165 and a dividend at £5 followed by Bad when the share
will be sold at a loss of £30 and no dividend will be received.
The probability for good is 25% and normal 40%.
Make an evaluation of this