Awarded large number of executive stock options

Assignment Help Financial Management
Reference no: EM131620236

You are the CEO of Solar-Tech Solutions Inc., and have just been awarded a large number of executive stock options. The company has two mutually exclusive projects available. The first project has a large NPV and will reduce the total risk of the company. The second project has a small NPV and will increase the total risk of the company. Your first thought is to accept the first project when you remember your executive stock options. How might this affect your final decision? [NOTE: Accepting the second project, which will increase the overall risk of the company and reduce the value of the firm’s debt. On the other hand, accepting the risky project will increase your wealth, as the options are more valuable when the risk of the firm increases.]

Reference no: EM131620236

Questions Cloud

Differences between joint operation and joint venture : Briefly outline the main differences between a Joint Operation and a Joint Venture
It is acceptable to net material cash inflows and outflows : Outline the 2 general circumstances where it is acceptable to net material cash inflows and outflows?
What is the investor pre-tax levered retrun expectation : Based on this scenario, what is the investor's pre-tax levered retrun expectation, in percent.
What is the market value of the building in dollars : You are considering the purchase of a small office building. what is the market value of the building, in dollars?
Awarded large number of executive stock options : You are the CEO of Solar-Tech Solutions Inc., and have just been awarded a large number of executive stock options.
Why would you consider conducting business internationally : What are the major risks of conducting business outside of your domestic environment? Why would you consider conducting business internationally?
Discuss the typical four phases of project life cycle : Discuss the typical four phases of a project life cycle and some common decisions that management must make for specific projects.
What is meant by sensitivity analysis : What is meant by sensitivity analysis? How can it be used to help improve investment appraisal techniques?
Find the present value of this annuity : A 10-year annuity-immediate pays 100 quarterly for the first year. Find the present value of this annuity.

Reviews

Write a Review

Financial Management Questions & Answers

  Requires initial investment in spare parts inventory

Massey Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $380,000 is estimated to result in $145,000 in annual pretax cost savings. The press also requires an initial investment in sp..

  Find the future values of an annuity

Find the future values of the following ordinary annuities: FV of $800 paid each 6 months for 5 years at a nominal rate of 6% compounded semiannually.

  What will be required return on your portfolio

If you invest the money in a stock with a beta of 0.70, what will be the required return on your $5.5 million portfolio?

  Annual percentage increase in winner check over this period

In 1901, the first Green Jacket Golf Championship was held. The winner's prize money was $210. In 2015, the winner's check was $1, 550,000. What was the annual percentage increase in the winner's check over this period?

  Risk-free rate have to be for the two stocks

Stock Y has a beta of 1.8 and an expected return of 18.2 percent. Stock Z has a beta of 0.8 and an expected return of 9.6 percent. What would the risk-free rate have to be for the two stocks to be correctly priced?

  Selling-general and administrative expenses

Vikings Inc., is develeping a pro form income statement for the coming year. This chief financial officer estimates that sales will be $150,000,000. If selling, general, and administrative expenses (SGA) are historically 18% of sales, what are the ex..

  Royals valuation of bishop stock is approximately

Beth Knight, CFA, and David Royal, CFA, are independently analyzing the value of Bishop, Inc. stock.Royal’s valuation of Bishop stock is approximately:

  What is the expected capital gains yield and dividend yield

The next dividend payment by United Corporation will be $1.50 per share. what is the dividend yield? what is the expected capital gains yield?

  Complete the cost approach to value

Complete the cost approach to value, assuming that, because the property is new, no depreciation of the structure is required.

  Using activity based pricing marks up the cost of goods

A company using activity based pricing marks up the cost of goods by 0.27 plus charges customers for indirect costs based on the activities utilized by the customer. Indirect costs are charged as follows: $7.90 per order placed; $2.80 per separate it..

  Analyze cash budget-determine quarters of surplus-deficit

Klausenheimer, Inc. recently hired you. One of your first tasks is to analyze the cash budget for the company to determine quarters of surplus/deficit. Therefore, you need to complete the information given below (fill in the missing information.

  Find the value today to the party paying dollars

Find the value today to the party paying dollars of this swap.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd