What’s your real cost of capital? By James J. McNulty‚ Tony D. Yeh‚ William s. Schulze‚ and Michael H. Lubatkin Harvard Business Review‚ October 2002 Issue of the article: valuing investment projects Number of pages: 12 Daniel Miravet Campos Part 1. Executive summary This article is fundamentally based on the exposition of a new method to calculate the cost of capital for a company (MCPM)‚ to meet the inefficiencies of the current one (CAPM). In valuing any investment project or
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8 Nonlinear Optimization Models MULTIPLE CHOICE 1. Which of the following is incorrect? a. A global optimum is a local optimum in a nonlinear optimization problem. b. A local maximum is a global maximum in a concave nonlinear optimization problem. c. A global minimum is a local minimum in a convex nonlinear optimization problem. d. A local optimum is a global optimum in a nonlinear optimization problem. ANSWER: d TOPIC: Local and global optima 2. The measure of risk most
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MW Petroleum Corporation (A) 1. Structure and execute a DCF valuation of all the MW reserves using APV. How much are the reserves worth? Is your estimate more likely to be biased high or low? What are the sources of bias? Answer: The DCF valuation of all the MW reserves using APV indicates that the net worth of the portfolio is around $516.30 million. The estimate is more likely to be biased on the higher side. REVENUES: The data for the projections was collected by Morgan
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1. What is diversifiable risk? It is a part that can be eliminated by diversification . 2.What is preferred stock? Stock with dividend priority over common stock‚ normally with a fixed dividend rate‚sometime without voting rights. 3.What is risk premium? The excess return required from an investment in a risky asset over that required from an risk-free investment. 4.What is principle of diversification? Spreading an investment across a number of asset will eliminate some‚ but not all‚of the
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AF335: Final Paper - StockTrak Performance Analysis Due on the day of the final‚ at the beginning of the final. Early Completion Incentive If you turn your paper in by the beginning of class on December 11th‚ you will get 5 extra points. Groups: This project must be done with your trading partner(s) with whom you worked on the StockTrak Deliverables 1. Submit a hard copy and email me BOTH your write-up and spreadsheet 2. Write-up must be typed. 3. The quality of writing will affect
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FIN 370 Lab Study Guide - All Weeks - Additional Formula (Compound interest) to what amount will the following investments accumulate? a. $5‚000 invested for 10 years at 10 percent compounded annually 5000 x (1.10)^10 = 5000 x2.5937 =12968.5 b. $8‚000 invested for 7 years at 8 percent compounded annually 8000 x (1.08)^7 = 8000 x 1.7138 = 13710.59 c. $775 invested for 12 years at 12 percent compounded annually 775 x (1.12)^12 = 775 x3.8959 =3019.38 d. $21‚000 invested for 5 years at 5 percent
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1. How does Ben’s age affect his decision to get an MBA? In this case‚ Ben’s age affects his decision to get an MBA because he is now 28 years old and has been out of school for six years. Assuming Ben has worked for the previous years since graduation‚ he has accumulated money from saving his salary in order to obtain his MBA. Now starting an MBA program at 28 years old‚ Ben will suspend working to spend at least two years studying and finishing his MBA. He will finish by the age of 30 if he
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Sample Outline for Review‚ Gap‚ Purpose‚ Significance and Scope 1.3.1 The Numerical Approach … (omitted review of earlier studies) Modified Smith’s model incorporating Novak’s theoretical solution -Simon & Randolph (1985)‚ Wong (1988) different definitions of ultimate failure – assumptions difference in result – insignificant Discrepancy - measured & simulated radiation damping effect - cause (Nogami & Konagai‚ 1986) Deal with discrepancy - include shear zone - Novak & Sheta‚ 1994 [Summary/Comments]
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1. How will discount rates of 8‚ 10‚ 12‚ 14‚ and 16 percent affect the project’s feasibility? Figures 6 – 10 provide suggested answers for this question. The answers for this question assume a useful life of 5 years. Using a discount rate of 8 percent‚ the net present value of all benefits is $1‚732‚836.16; the net present value of all costs is $1‚640‚384.79; the overall net present value is $92‚451.36‚ and the project breaks even in approximately 3.84 years. Using a 10 percent discount rate‚ the
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AP Calculus Name ____________________________ Period _____ Functions Defined by Integrals The graph below is‚ the derivative of. The graph consists of two semicircles and one line segment. Horizontal tangents are located at and and a vertical tangent is located at. 1. On what interval is increasing? Justify your answer. 2. For what values of x does have a relative minimum? Justify. 3. On what intervals is concave up? Justify 4. For what values of x is undefined? 5. Identify
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