Payoff table: Large Investment Medium Investment Small Investment Probabilities Strong Demand $400,000 $100,000 $25,000 45% O Medium Investment Small Investment O Large Investment O Can't be determined Weak Demand $-200,000 $-50,000 $10,000 55% What is the best decision alternative using the expected value criteria?

Payoff table: Large Investment Medium Investment Small Investment Probabilities Strong Demand $400,000 $100,000 $25,000 45% O Medium Investment Small Investment O Large Investment O Can't be determined Weak Demand $-200,000 $-50,000 $10,000 55% What is the best decision alternative using the expected value criteria?

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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KLA Cost Ziege Systems is considering the following independent projects for the coming year Project Required Investorent Rate of Return Risk A $4 million 12.25% Hish High $5 million Low B C DEFGH $3 million $2 million $6 million $5 million $6 million $3 million 500 14.75 10.25 9.75 13.25 13.25 7.75 12.25 million Average High Average Low Low } If Ziege con only invest a total of $13 million what would be the dollar size of its capital budget? $ million What would be the dollar size of its capital budget? $
Q1 Compare present value analysis, (minimum attractive rate of return is %8 annualy.) Alternative F Alternative Z First cost, TL Annual earning, TL Maintance cost every 5 year, 400.000 650.000 -same amount- wwww w 90.000 115.000 www m 25.000 30.000 TL Scrap value, TL lifetime, (years) 100.000 1.200.000 50 infinite
Pronto Email service has a beta of 0.95 and a cost of equity of 11.9 percent. The risk-free rate of return is 2.8 percent. The firm is currently considering a project that has a beta of 1.03 and a project life of 6 years. What discount rate should be assigned to this project? a. 13.33% b. 13.84% c. 12.67% d. 13.62%
4. We only have OMR 800,000 to invest. Which do we select based on Weighted average profitability index method ? Project NPV Investment PI A 430,000 500,000 B 241,250 225,000 C 394,250 375,000 D 262,000 575,000
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9.36 The fouT mutuzlly exclusive alternatives below are being compared using the B/C method. What altemative, if any, should be selected? Initial Investment, Incremental B/C When Compared With Altemative Altemative S Millions BC Ratio K L 20 0.40 --- 25 33 0.96 122 K 1.42 2.14 --- 0.72 0.80 0.08-- 45 0.39 I. Activate Winde PC settings to DFocus SAN FRACISCO.CA
Data Using Incremental with EUAW analysis find the best alternative, MARR = %10. You should use Excel and show your equations separately, see below example: [A Benefit - [IC (A/P, i%, n) - Salvage (A/F, i, n)] + A Cost+ G Cost (A/G, i, n)] First Cost Salvage Value Annual Benefit M&O M&O Gradient Useful Life, Years A $2,300,000 $85,000 $580,000 $65,000 $10,000 10 B $2,750,000 $125,000 $670,000 $78,000 $15,000 10 с $2,550,000 $95,000 $650,000 $72,000 $12,500 10
Project A has the following estimated cash flows and present values:Year Cash flow $ Discount factor@ 12% Present value $0 Cost (95 000) 1.0 (95 000) 1–5 Contributionper annum 50 000 3.605 180 250 1–5 Fixed costsper annum (25 000) 3.605 (90 125) 5 Residual value 20 000 0.567 11 340 The benefit of using sensitivity analysis in an investment appraisal would be:
Typed plz and asap please provide a quality solution take care of plagiarism
Blooper's analysts have come up with the following revised estimates for its magnoosium mine: Range Pessimistic Optimistic Initial investment +50% -25% Revenues -15% +20% Variable costs, percent of revenues +10% -10% Fixed costs +50% -30% Working capital, percent of expected value +50% -50% Conduct a sensitivity analysis for each variable and range and compute the NPV for each. Use Spreadsheet 10.1 and accompanying data as a starting point for the analysis. Note: Do not round intermediate calculations. Negative amounts should be indicated by a minus sign. Enter your answer in millions rounded to 2 decimal places. Project NPV Pessimistic Expected Optimistic Initial investment Revenues Variable costs Fixed costs Working capital
A project has an initial investment of 100. You have come up with the following estimates of the project's cash flows (there are no taxes): Revenues Costs Pessimistic 15 8 Multiple Choice -30, +20, +70. Suppose the cash flows are perpetuities and the cost of capital is 10 percent. Conduct a sensitivity analysis of the project's NPV to variations in revenues. (Answers appear in order: [Pessimistic, Most Likely, Optimistic].) -50, +50, +70. -100, -50, +80. Most Likely +5, +11, +18. 20 8 Optimistic 25 8
Under normal conditions (65% probability), Plan A will produce a $39,000 higher return than Plan B. Under tight money conditions (35% probability), Plan A will produce $113,000 less than Plan B. What is the expected value of return? (Amounts in parentheses indicate negative values.)

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