Best estimate of the future annual returns

Assignment Help Financial Management
Reference no: EM13919362

Over a 30-year period an asset had an arithmetic return of 13 percent and a geometric return of 10.5 percent. Using Blume's formula, what is your best estimate of the future annual returns over the next 10 years?

11.18 percent

12.04 percent

11.84 percent

12.22 percent

12.46 percent

Reference no: EM13919362

Questions Cloud

What is the companys pretax cost of debt : Drogo, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 18 years to maturity that is quoted at 108 percent of face value. The issue makes semiannual payments and has an embedded cost of 4 percent annually. Wha..
Find the value of the annuity : Find the value of the annuity where R= $4,600 is the quarterly payment at 7.71% interest compounded quarterly for 9 years.
Result in initial aftertax cash savings : Scanlin, Inc., is considering a project that will result in initial aftertax cash savings of $1.73 million at the end of the first year, and these savings will grow at a rate of 3 percent per year indefinitely. The firm has a target debt−equity ratio..
Firm is contemplating-depreciated straight-line to zero : Your firm is contemplating the purchase of a new $648,000 computer-based order entry system. The system will be depreciated straight-line to zero over its six-year life. It will be worth $47,000 at the end of that time. Working capital will revert ba..
Best estimate of the future annual returns : Over a 30-year period an asset had an arithmetic return of 13 percent and a geometric return of 10.5 percent. Using Blume's formula, what is your best estimate of the future annual returns over the next 10 years?
What is the npv of the loan guarantee : Financing Subsidy. Arcos Corporation, a U.S firm, is trying to fund a project in Mexico. The Mexican government has offered Arcos a loan guarantee that will enable it to borrow MXN 10 million for five years at annual interest cost of 5 percent. Witho..
Construction firm financed by both debt and equity : Strudler Real Estate, Inc., a construction firm financed by both debt and equity, is undertaking a new project. If the project is successful, the value of the firm in one year will be $380 million, but if the project is a failure, the firm will be wo..
Dollar to yen exchange rate : In 1980 the dollar to yen exchange rate was about $0.0045. In 2007 the yen to dollar exchange rate was about 121 yen per dollar. A Japanese producer would have had to increase the dollar price of a good sold in the U.S. by _____ to maintain the same ..
Three economic states-their likelihoods and potential return : Compute the expected return given these three economic states, their likelihoods, and the potential returns:

Reviews

Write a Review

Financial Management Questions & Answers

  Consumers awareness and concerns

Collecting and using personal data: consumers' awareness and concerns

  Arbitrage argument by constructing two appropriate portfolio

Prove via a no-arbitrage argument by constructing two appropriate portfolios that the value of an American call is equal to the value of a European call.

  What is current bond price-bonds make semiannual payments

Sqeekers Co. issued 13-year bonds a year ago at a coupon rate of 7.9 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 6.2 percent, what is the current bond price?

  Rise for the option strategy to be more profitable

The current price of a stock is $84, and three-month European call options with a strike price of $85 currently sell for $4.20. An investor who feels that the price of the stock will increase is trying to decide between buying 100 shares and buying 2..

  Find a reputable article on the web about how to make your

find a reputable article on the web about how to make your market portfolio an efficient portfolio or how to win at the

  What is the addition to retained earnings

Billy’s Exterminators, Inc., has sales of $592,000, costs of $284,000, depreciation expense of $36,000, interest expense of $28,000, a tax rate of 35 percent and paid out $63,000 in cash dividends. What is the addition to retained earnings?

  What overall net income would be produced

What overall net income would be produced if the admission rate of the capitated group were reduced from the commercial level by 10 percent?

  What is its current yield and yield maturity

Locate the treasury issue in Figure 6.3 maturing in February 2037. Is this a premium or a discount bond? What is its current yield? What is its yield maturity? What is the bid-ask spread for a $1000 par value bond?

  Determine estimated total annual inventory cost

Using the initial simulation results, determine the estimated total annual inventory cost using the cost parameters provided in the example. Break out between order cost, holding cost, and stockout cost.

  Describing events in the market for treasury securities

The following is from an article in the Wall Street Journal, describing events in the market for Treasury securities on the given day:” Treasury prices were mixed, with the shorter end of the yield curve rising and the longer- dated Treasury’s fallin..

  What is the balance of the accumulated depreciation account

The balance in the accumulated depreciation account of Golf Corporation as on April 1st 2011 was Rs 2,00,000 when the original cost of assets was Rs 10,00,000. The company charges 10% depreciation on a straight-line basis. One such asset costing Rs 5..

  What is the yield to maturity on each bond

Shankalot Investment Company plans to purchase either (1) zero-coupon bonds that have ten years to maturity, a par value of $100 million, What is the yield to maturity on each bond? What is the duration of each bond?

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