Week 2 problems Chapter 2 A1 (Present and future value) A. What is the future value of $2‚000 invested today if it earns 20% interest for one year? For two years? Rate 20% (1) -(2‚000)= $2‚400 one year Rate 20% (2) (-2‚000)= $2‚880 two years B. What is the present value of $2‚000 discounted at 20% if it is received in one year? In two years? Rate 20 % (1) (-2‚000)= 1‚666 discounted one year Rate 20% (2) (-2000)= $1‚388 discounted two years B4. (Present value) What is the
Premium Generally Accepted Accounting Principles Depreciation Future
P5–3 Risk preferences Sharon Smith‚ the financial manager for Barnett Corporation‚ wishes to evaluate three prospective investments: X‚ Y‚ and Z. Currently‚ the firm earns 12% on its investments‚ which have a risk index of 6%. The expected return and expected risk of the investments are as follows: Investment Expected return Expected risk index X 14% 7% Y 12 8 Z 10 9 a. If Sharon were risk-indifferent‚ which investments would she select? Explain why. If Sharon were risk-indifferent
Premium Investment Risk Rate of return
1 NPV—Mutually exclusive projects Hook Industries is considering the replacement of one of its old drill presses. Three alternative replacement presses are under consideration. The relevant cash flows associated with each are shown in the following table. The firm’s cost of capital is 15%. a. Calculate the net present value (NPV) of each press. b. Using NPV‚ evaluate the acceptability of each press. c. Rank the presses from best to worst using NPV. PERSONAL FINANCE PROBLEM P9–11 Long-term
Premium Net present value Finance
SOLUTIONS MANUAL CHAPTER 10 BEHAVIORAL FINANCE AND TECHNICAL ANALYSIS Answers to Text Discussion Questions 1. Discuss market bubbles and offer an opinion on why you think investors have trouble spotting bubbles. 10-1. Markets are not always rational and the herd instinct of following the crowds often causes investors and others to ignore the signs that point to a bubble. Bubbles catch professional investors as well as the novice. 2. Describe the three heuristics that investors use
Premium Technical analysis Dow Jones Industrial Average
1. Select an organization of your choice and discuss the cash Management system in that organization. Give your Views or suggestions on the prevailing system of cash management in that organization and any suitable changes to be brought about‚ to improve the present system? Cash management is a set of strategies or techniques a company uses to collect‚ track and invest money. Although cash by definition refers only to paper or coin money‚ in cash management‚ companies usually also work with cash
Premium Dividend yield Mergers and acquisitions P/E ratio
Question 1 Not yet answered Marked out of 1.00 Flag question Question text A project has initial costs of $3‚000 and subsequent cash inflows in years 1 ? 4 of $1350‚ 275‚ 875‚ and 1525. The company’s cost of capital is 10%. Calculate the payback period for this project. Select one: A. 3.33 years B. 3.67 years C. 4.00 years D. 4.25 years Question 2 Not yet answered Marked out of 1.00 Flag question Question text A project has initial costs of $3‚000 and subsequent cash inflows in years
Premium Net present value Internal rate of return
Chapter 6: Discussion Question #4 (p. 223) 4. Why is it usually easier to forecast sales for seasoned firms in contrast with early-stage ventures? Typically‚ it is easier to forecast a seasoned firm’s sales to that of an early-stage venture because the seasoned firm will have an operational history. Basing current sales on historical data is easier to do than trying to estimate sales based on little to no historical data to benchmark from. If you are a start-up / early-stage venture and
Premium Generally Accepted Accounting Principles Financial ratios Investment
For many years‚ by many nations The Whaling Industry has been commercially profitable businesses who kill many types of whales. In the 18th‚ 19th and 20th century whaling fleets set their voyages from Europe and North America; they sourced the whales for their oil‚ whalebone for corsets‚ ambergris for perfume and meat for villages. The Japanese Whaling history goes back as far as 10‚000 B.C. when whales were driven into nets and harpooned repeatedly‚ then they would dispatch with a long sword or
Premium Humpback whale Whaling Cetacea
Sea Mammal hunting is a major problem in the 21st century. The problem is most apparent in Japan. Japanese people are hunting sea mammals‚ and it is resulting in horrific effects on the sea mammal population. The organization Greenpeace has addressed this problem and they are educating people about this and trying to stop it in Japan. A major problem is sea mammal hunting in Japan. Japan recently killed 333 Minke whales‚ 103 males and 230 female. Most females were pregnant‚ and it was claimed
Premium Humpback whale Cetacea Whaling
Under the Endangered Species Act in the United States‚ species may be listed as "endangered" or "threatened". The Salt Creek tiger beetle (Cicindela nevadica lincolniana) is an example of an endangered subspecies protected under the ESA. The US Fish and Wildlife Service as well as the National Marine Fisheries Service are held responsible for classifying and protecting endangered species‚ and adding a particular species to the list can be a long‚ controversial process (Wilcove & Master‚ 2008‚ p.
Premium Endangered species Humpback whale Extinction