Return of the manager for a month and decide it is over performance or under performance. Introduction: Return of manager is decided by the difference of the B’s return and actual return. If the difference is positive then it will be under performance and if it is negative then it will be over performance.

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Answer 1

Question

Chapter 24, Problem 11PS

A

Summary Introduction

To calculate: Return of the manager for a month and decide it is over performance or under performance.

Introduction: Return of manager is decided by the difference of the B’s return and actual return. If the difference is positive then it will be under performance and if it is negative then it will be over performance.

B

Summary Introduction

To calculate: Security selection’s contribution relative to the performance.

Introduction: The performance is the product of the excess weight and return of index. The value is depending on the equity, cash, and bond values.

C

Summary Introduction

To calculate: Total contribution of relative performance.

Introduction: The relative performance is the sum of long cap growth, mid cap growth and small cap growth.

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The Perez Company has the opportunity to invest in one of two mutually exclusive machines that will produce a product it will need for the foreseeable future. Machine A costs $8 million but realizes after-tax inflows of $4.5 million per year for 4 years. After 4 years, the machine must be replaced. Machine B costs $17 million and realizes after-tax inflows of $4 million per year for 8 years, after which it must be replaced. Assume that machine prices are not expected to rise because inflation will be offset by cheaper components used in the machines. The cost of capital is 13%. Using the replacement chain approach to project analysis, by how much would the value of the company increase if it accepted the better machine? Round your answer to two decimal places. 1.) $ million

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The Perez Company has the opportunity to invest in one of two mutually exclusive machines that will produce a product it will need for the foreseeable future. Machine A costs $8 million but realizes after-tax inflows of $4.5 million per year for 4 years. After 4 years, the machine must be replaced. Machine B costs $17 million and realizes after-tax inflows of $4 million per year for 8 years, after which it must be replaced. Assume that machine prices are not expected to rise because inflation will be offset by cheaper components used in the machines. The cost of capital is 13%. Using the replacement chain approach to project analysis, by how much would the value of the company increase if it accepted the better machine? Round your answer to two decimal places. 1.) $ million What is the equivalent annual annuity for each machine? Do not round intermediate calculations. Round your answers to two decimal places. 2.) Machine A: $ million 3.) Machine B: $ million

Answer 2

Question

Chapter 24, Problem 11PS

A

Summary Introduction

To calculate: Return of the manager for a month and decide it is over performance or under performance.

Introduction: Return of manager is decided by the difference of the B’s return and actual return. If the difference is positive then it will be under performance and if it is negative then it will be over performance.

B

Summary Introduction

To calculate: Security selection’s contribution relative to the performance.

Introduction: The performance is the product of the excess weight and return of index. The value is depending on the equity, cash, and bond values.

C

Summary Introduction

To calculate: Total contribution of relative performance.

Introduction: The relative performance is the sum of long cap growth, mid cap growth and small cap growth.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 24, Problem 11PS

A

Summary Introduction

To calculate: Return of the manager for a month and decide it is over performance or under performance.

Introduction: Return of manager is decided by the difference of the B’s return and actual return. If the difference is positive then it will be under performance and if it is negative then it will be over performance.

B

Summary Introduction

To calculate: Security selection’s contribution relative to the performance.

Introduction: The performance is the product of the excess weight and return of index. The value is depending on the equity, cash, and bond values.

C

Summary Introduction

To calculate: Total contribution of relative performance.

Introduction: The relative performance is the sum of long cap growth, mid cap growth and small cap growth.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 24, Problem 11PS

A

Summary Introduction

To calculate: Return of the manager for a month and decide it is over performance or under performance.

Introduction: Return of manager is decided by the difference of the B’s return and actual return. If the difference is positive then it will be under performance and if it is negative then it will be over performance.

B

Summary Introduction

To calculate: Security selection’s contribution relative to the performance.

Introduction: The performance is the product of the excess weight and return of index. The value is depending on the equity, cash, and bond values.

C

Summary Introduction

To calculate: Total contribution of relative performance.

Introduction: The relative performance is the sum of long cap growth, mid cap growth and small cap growth.

Expert Solution & Answer

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Answer 5

Chapter 24, Problem 11PS

A

Summary Introduction

To calculate: Return of the manager for a month and decide it is over performance or under performance.

Introduction: Return of manager is decided by the difference of the B’s return and actual return. If the difference is positive then it will be under performance and if it is negative then it will be over performance.

B

Summary Introduction

To calculate: Security selection’s contribution relative to the performance.

Introduction: The performance is the product of the excess weight and return of index. The value is depending on the equity, cash, and bond values.

C

Summary Introduction

To calculate: Total contribution of relative performance.

Introduction: The relative performance is the sum of long cap growth, mid cap growth and small cap growth.

Answer 6

Chapter 24, Problem 11PS

A

Summary Introduction

To calculate: Return of the manager for a month and decide it is over performance or under performance.

Introduction: Return of manager is decided by the difference of the B’s return and actual return. If the difference is positive then it will be under performance and if it is negative then it will be over performance.

Answer 7

Chapter 24, Problem 11PS

A

Summary Introduction

To calculate: Return of the manager for a month and decide it is over performance or under performance.

Introduction: Return of manager is decided by the difference of the B’s return and actual return. If the difference is positive then it will be under performance and if it is negative then it will be over performance.

Answer 8

B

Summary Introduction

To calculate: Security selection’s contribution relative to the performance.

Introduction: The performance is the product of the excess weight and return of index. The value is depending on the equity, cash, and bond values.

Answer 9

B

Summary Introduction

To calculate: Security selection’s contribution relative to the performance.

Introduction: The performance is the product of the excess weight and return of index. The value is depending on the equity, cash, and bond values.

Answer 10

C

Summary Introduction

To calculate: Total contribution of relative performance.

Introduction: The relative performance is the sum of long cap growth, mid cap growth and small cap growth.

Answer 11

C

Summary Introduction

To calculate: Total contribution of relative performance.

Introduction: The relative performance is the sum of long cap growth, mid cap growth and small cap growth.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 24 - Prob. 1PS Ch. 24 - Prob. 2PS Ch. 24 - Prob. 3PS Ch. 24 - Prob. 4PS Ch. 24 - Prob. 5PS Ch. 24 - Prob. 6PS Ch. 24 - Prob. 7PS Ch. 24 - Prob. 8PS Ch. 24 - Prob. 9PS Ch. 24 - Prob. 10PS

Solution Summary: The author explains how the return of the manager is determined by the difference of B's return and actual return.

To calculate: Security selection’s contribution relative to the performance.

Introduction: The performance is the product of the excess weight and return of index. The value is depending on the equity, cash, and bond values.

To calculate: Total contribution of relative performance.

Introduction: The relative performance is the sum of long cap growth, mid cap growth and small cap growth.

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Chapter 24 Solutions

Solution Summary: The author explains how the return of the manager is determined by the difference of B's return and actual return.

To calculate: Security selection’s contribution relative to the performance. Introduction: The performance is the product of the excess weight and return of index. The value is depending on the equity, cash, and bond values.

To calculate: Total contribution of relative performance. Introduction: The relative performance is the sum of long cap growth, mid cap growth and small cap growth.

Want to see the full answer?

Chapter 24 Solutions

To calculate: Security selection’s contribution relative to the performance.

Introduction: The performance is the product of the excess weight and return of index. The value is depending on the equity, cash, and bond values.

To calculate: Total contribution of relative performance.

Introduction: The relative performance is the sum of long cap growth, mid cap growth and small cap growth.