The management of the BST Inn estimated that they can generate $182,000 and$190,000 in room revenues in 2010 and 2011 respectively by using some otherforecasting methods. However, the total room revenues were actually $187,000and $203,000 in 2010 and 2011 respectively. Finance and accounting directorsin the management team wants to come up with a robust forecasting report andthey want to see the forecasting results done with exponential smoothingmodels. Therefore, if the management wishes to have 3,000 rooms sold in 2012.What is the forecasted ADR in 2012 based on the exponential smoothing model?$70.27$73.12$69.79$66.80

The Management of the BST inn estimated that they can generate $182,000 and $190,000 in room revenue…

Answered: The management of the BST Inn estimated…

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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I asked this question before, and got an answer, but I have a question about the response that was given. The original question was: For an initial investment of 100, an investment yields returns of X1 and X2, where X1 and X2 are independent normal random variables with mean 60 and variance 25. What is the probability that the rate of return of this investment is greater than 10%? In the answer that was given it says that the gain of the investment is X1+X2. My question is why can we just group those together as one amount? I was given a formula in my class that says the return on the investment would be the solution to the equation: -100+ X1/(1+r) + X2/(1+r)2=0. If this formula is used, a different solution would result for this problem.
The AFN equation provides useful insights into the forecasting process, but this equation assumes that all of the firm's key ratios remain constant, which is not likely to hold true. Consequently, it is useful to forecast the firm's financial statements. The firm begins with forecasting its -Select- V which then feeds into the firm's balance sheet. Management looks at operating ratios and their relationship with industry and benchmark averages. The forecasted income statement begins with the prior year's income statement and is adjusted for the sales growth forecast. Some inputs for the income statement are not under the firm's control - for example, tax and interest rates. The forecasted balance sheet is calculated from asset ratios that management has reviewed and changed based on industry and benchmark averages. An Excel spreadsheet is used for this analysis because changes in assumptions, financing, and ratios can be made to the statements to review alternative scenarios. The…
If the economy booms, RTF, Incorporated, stock is expected to return 10 percent. If the economy goes into a recessionary period, then RTF is expected to only return 3 percent. The probability of a boom is 65 percent while the probability of a recession is 35 percent. What is the variance of the returns on RTF, Incorporated, stock?
BFC is an agribusiness with a highly variable cash flow, but where the risks tend to be related to weather, commodity price cycles and other random factors not closely tied to the business cycle. Indeed, the correlation between the return on BFC equity and the return on the S&P 500 is just 0.3. However, the variance of the return on BFC’s equity is 12.25 times the variance of the return on the S&P 500. a) What is the CAPM beta coefficient for BFC equity? b) If the current risk-free rate is 3% and the expected return on the S&P 500 is 10.5%, what is the expected return on BFC equity according to CAPM?
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.
You and another analyst are asked to choose between two projects. Your manager tells you that the opportunity cost of capital is 10%. The other analyst points out that Project B has an IRR of 37.3%, which is much higher than Project A’s IRR of 24.7%, so he thinks Project B is the better project. Do you agree or disagree? Explain your answer. If you disagree with the intern, explain why the other analyst’s logic is incorrect.
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
It's best to add columns for deviation, standard deviation, and squared deviation multiplied by probability.
You are asked to evaluate a new tractor project for Deere. The engineers and marketing and accounting folks have pooled their efforts to generate the following expectations about the project's cash flows (FCFF): CF 0 = - 109.4, CF1 = 20, CF2 =,55, CF3 = 60, CF4 = 60, CF4 = 25, CF5 = 10. If the WACC is 10%, what will be the profitability index for this project? (write this number as a decimal and not as a percentage, e.g. 0.11 not 11 %. Round your answer to three decimal places. For example 1.23450 or 1.23463 will be rounded to 1.235 while 1.23448 will be rounded to 1.234)

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