Range of rate of return . Introduction: Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss. Return: In financial context, return is seen as percentage that represents the profit in an investment.

Question

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Answer 1

Question

Chapter 8, Problem 8.4P

a)

Summary Introduction

To determine:

Range of rate of return.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

b)

Summary Introduction

To determine:

Less risky project.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

c)

Summary Introduction

To discuss:

Risk preferences and investment decision.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

d)

Summary Introduction

To discuss:

Change in investment decision with change in most likely return.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

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(d) Estimate the value of a share of Cisco common stock using the discounted cash flow (DCF) model as of July 27, 2019 using the following assumptions Assumptions Discount rate (WACC) Common shares outstanding 7.60% 5,029.00 million Net nonoperating obligations (NNO) $(8,747) million NNO is negative, which means that Cisco has net nonoperating investments CSCO ($ millions) DCF Model Reported 2019 Forecast Horizon 2020 Est. 2021 Est. 2022 Est. 2023 Est. Terminal Period Increase in NOA FCFF (NOPAT - Increase in NOA) $ 1241 1303 1368 10673 11207 11767 1437 $ 12354 302 ✓ Present value of horizon FCFF 9918 9679 9445 ✔ 0 × Cum. present value of horizon FCFF $ 0 × Present value of terminal FCFF 0 ☑ Total firm value 0 ☑ NNO -8747 ✓ Firm equity value $ 0 ☑ Shares outstanding (millions) 5029 Stock price per share $ 40.05

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Answer 2

Question

Chapter 8, Problem 8.4P

a)

Summary Introduction

To determine:

Range of rate of return.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

b)

Summary Introduction

To determine:

Less risky project.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

c)

Summary Introduction

To discuss:

Risk preferences and investment decision.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

d)

Summary Introduction

To discuss:

Change in investment decision with change in most likely return.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

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Answer 3

Question

Chapter 8, Problem 8.4P

a)

Summary Introduction

To determine:

Range of rate of return.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

b)

Summary Introduction

To determine:

Less risky project.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

c)

Summary Introduction

To discuss:

Risk preferences and investment decision.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

d)

Summary Introduction

To discuss:

Change in investment decision with change in most likely return.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

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Answer 4

Question

Chapter 8, Problem 8.4P

a)

Summary Introduction

To determine:

Range of rate of return.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

b)

Summary Introduction

To determine:

Less risky project.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

c)

Summary Introduction

To discuss:

Risk preferences and investment decision.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

d)

Summary Introduction

To discuss:

Change in investment decision with change in most likely return.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

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Answer 5

Chapter 8, Problem 8.4P

a)

Summary Introduction

To determine:

Range of rate of return.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

b)

Summary Introduction

To determine:

Less risky project.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

c)

Summary Introduction

To discuss:

Risk preferences and investment decision.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

d)

Summary Introduction

To discuss:

Change in investment decision with change in most likely return.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Answer 6

Chapter 8, Problem 8.4P

a)

Summary Introduction

To determine:

Range of rate of return.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Answer 7

Chapter 8, Problem 8.4P

a)

Summary Introduction

To determine:

Range of rate of return.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Answer 8

b)

Summary Introduction

To determine:

Less risky project.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Answer 9

b)

Summary Introduction

To determine:

Less risky project.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Answer 10

c)

Summary Introduction

To discuss:

Risk preferences and investment decision.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Answer 11

c)

Summary Introduction

To discuss:

Risk preferences and investment decision.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Answer 12

d)

Summary Introduction

To discuss:

Change in investment decision with change in most likely return.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Answer 13

d)

Summary Introduction

To discuss:

Change in investment decision with change in most likely return.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Answer 14

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Answer 15

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Answer 16

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Answer 17

Ch. 8.1 - What is risk in the context of financial decision...Ch. 8.1 - Prob. 8.2RQ Ch. 8.1 - Compare the following risk preferences: (a) risk...Ch. 8.2 - Explain how the range is used in scenario...Ch. 8.2 - Prob. 8.5RQ Ch. 8.2 - Prob. 8.6RQ Ch. 8.2 - What does the coefficient of variation reveal...Ch. 8.3 - What is an efficient portfolio? How can the return...Ch. 8.3 - Prob. 8.9RQ Ch. 8.3 - How does international diversification enhance...

Solution Summary: The author defines risk as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

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