Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Question
Chapter 6, Problem 44P
To determine
Calculate the annual value.
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Stock Y is currently priced at $25/share and pays dividends
continuously at a rate proportional to its price at a constant rate
of 3%. An investor short sells 500 shares of the stock and
repays dividends by borrowing extra shares of stock Y. After
two months the investor closes out all positions when the stock
is priced at $24/share. The continuously compounded risk-free
interest rate is 5%. Calculate the two-month profit.
XTR company is considering investing in Project Zeta or Project Omega. Project Zeta
generates the following cash flows: year "zero" = 339 dollars (outflow); year 1 = 197 dollars
(inflow); year 2 = 312 dollars (inflow); year 3 = 355 dollars (inflow); year 4 = 192 dollars
(inflow). Project Omega generates the following cash flows: year "zero" = 230 dollars
(outflow); year 1 = 120 dollars (inflow); year 2 = 100 dollars (inflow); year 3 = 200 dollars
(inflow); year 4 = 120 dollars (inflow). The MARR is 10 %. Using the Annual Worth Method,
calculate the annual worth of the BEST project. (note: round your answer to the nearest cent,
and do not include spaces, currency signs, plus or minus signs, or commas)
105.28
156.41 margin of error +/- 20
David is a detective in the Atlanta Police Department earning $75,000 per year. He is also an avid cook and people rave about his cooking.
David hears of an opportunity to buy an existing restaurant . He needs to take $100,000 out of his brokerage truck to buy the restaurant. The $100,000 averaged a return of 10% over the last few years. Based on the recent history of the restaurant, he expects annual revenues of $400,000. He expects to spend $140,000 on food, $75,000 on employee expense, $50,000 on rent , and $25,000 for utilities each year.
David is trying to decide whether to quit his job as a detective and buy the restaurant.
Assuming that David is indifferent between being a detective and owning the restaurant, should David quit his job as a detective and buy the restaurant? Explain why or why not.
David’s significant other reminds him that he LOVES being a detective and that he will miss being a detective if he decides to go into the restaurant business. After…
Chapter 6 Solutions
Contemporary Engineering Economics (6th Edition)
Ch. 6 - Prob. 1PCh. 6 - Prob. 2PCh. 6 - Prob. 3PCh. 6 - Prob. 4PCh. 6 - Prob. 5PCh. 6 - Prob. 6PCh. 6 - Consider the cash flows in Table P6.7 for the...Ch. 6 - Prob. 8PCh. 6 - Prob. 9PCh. 6 - The repeating cash flows for a certain project are...
Ch. 6 - Beginning next year, a foundation will support an...Ch. 6 - Prob. 12PCh. 6 - Prob. 13PCh. 6 - Prob. 14PCh. 6 - Prob. 15PCh. 6 - Prob. 16PCh. 6 - Prob. 17PCh. 6 - Prob. 18PCh. 6 - The Geo-Star Manufacturing Company is considering...Ch. 6 - Prob. 20PCh. 6 - Prob. 21PCh. 6 - Prob. 22PCh. 6 - Prob. 23PCh. 6 - Prob. 24PCh. 6 - Prob. 25PCh. 6 - Prob. 26PCh. 6 - Prob. 27PCh. 6 - Prob. 28PCh. 6 - Prob. 29PCh. 6 - Prob. 30PCh. 6 - Prob. 31PCh. 6 - Prob. 32PCh. 6 - Prob. 33PCh. 6 - Prob. 34PCh. 6 - Prob. 35PCh. 6 - Prob. 36PCh. 6 - Prob. 37PCh. 6 - Prob. 38PCh. 6 - Prob. 39PCh. 6 - Prob. 40PCh. 6 - Prob. 41PCh. 6 - Prob. 42PCh. 6 - Prob. 43PCh. 6 - Prob. 44PCh. 6 - Prob. 45PCh. 6 - Prob. 46PCh. 6 - Prob. 47PCh. 6 - Prob. 48PCh. 6 - Prob. 49PCh. 6 - Prob. 50PCh. 6 - Prob. 51PCh. 6 - Prob. 52PCh. 6 - Prob. 53PCh. 6 - Prob. 1STCh. 6 - Prob. 2STCh. 6 - Prob. 3STCh. 6 - Prob. 4ST
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