Breakeven cash inflows and risk pueblo enterprises is

Assignment Help Microeconomics
Reference no: EM13395454

Breakeven Cash inflows and risk. Pueblo Enterprises is considering investing in either of tow mutually exclusive projects, X and Y. Project X requires an initial investment of $30,000; project Y requires $40,000. Each project's cash inflows are 5-year annuities. Project X's inflows are $10,000 per year; project Y's are $15,0000. The firm has unlimited funds and, in the absence of risk differences, accepts the project with the highest NPV. The cost of capital is 15%.

Profitability of achieving Cash inflow in given range

Range of cash inflow Project X Project Y

$0 to $5,000 0%` 5%

$5,000 to $7500 10 10

$7,500 to $10,000 60 15

$10,000 to $12,000 25 25

$12,500 to $15,000 5 20

$15,500 to $20,000 0 15

Above $20,000 0 10

b. Find the breakeven cash inflow for each project.

c. The firm has estimated the probabilities of achieging various ranges of cahse inflows for the two projects, as shown in the table above. What is the probability that each project will achieve the breakeven cahs inflow found in part b.

Reference no: EM13395454

Questions Cloud

Find the cross-price elasticity of demand between good x : the demand curve for a product is given by qxd 1200 - 3px - 0.1pz where pz 300. what is the cross-price elasticity of
Describe a situation from your own experience in which you : develop your own opinion about what constitutes social class. give evidence to support your opinion. discuss a
A 2-year 1000 par zero-coupon bond is currently priced at : a 2-year 1000 par zero-coupon bond is currently priced at 819.00. a 2-year 1000 annuity is currently priced at 1712.52.
Determine the inverse demand function for the firms product : you are the manager of a monopolistically competitive firm and your demand and cost functions are given by q 36 - 4p
Breakeven cash inflows and risk pueblo enterprises is : breakeven cash inflows and risk. pueblo enterprises is considering investing in either of tow mutually exclusive
It is obvious that there are differences which exist : it is obvious that there are differences that exist between the health status of people in the u.s. and those in less
Find an estimate of the risk-free rate of interest krf to : by walking through a set of financial data for xyz this assignment will help you better understand how theoretical
What aims to balance long term with short term concerns : 1 an organization that has a low relative market share position and competes in a slow-growth industry is referred to
What value must buildingone place on building bs : buildingone properties is a limited partnership formed with the express purpose of investing incommercial real estate.

Reviews

Write a Review

Microeconomics Questions & Answers

  Does either player have a dominant strategy

Suppose two world leaders "Nikita" and "Margaret" are engaged in an arms race and face the decision whether or not to build a missile. The payoffs of Nikita and Margaret are as follows: If both build a missile, both receive the payoff -10. If both ..

  Determine ethical issue is at stake

Cubby Company entered into a lease contract for ten photocopy machines for its corporate headquarters. The lease contract qualifies as an operating lease in all terms except there is a bargain buy option.

  Explain which is not considered as a unilateral transfer

International trade is most likely to occur whenever a. one of the trading nations is self-sufficient b. all of the trading nations are self-sufficient c. one of the trading nations gains from trade d. each of the trading nations gains from trade

  Explain the difference in prices

The difference in prices for each of the following pairs of goods in terms of the laws of supply and demand natural diamonds and zircons human-made diamonds.

  How to decline in the price of nova corporations stock

Nova corporation just announced that it had a record year. Its earnings have increased nearly 10%. Explain how this announcement can lead to a decline in the price of Nova Corporation's Stock

  Price elasticity of demand-soft rock cafe

What price would Soft Rock have to charge to sell 2,000 T shirts? Compute the own price elasticity of demand when the price goes from $5 to $4.

  Find out how many new clients should visit law office for

don masters and two of his colleagues are considering opening a law office in a large metropolitan area that would make

  Should marketing or sale be responsible for generating leads

1-) Which step of the personal selling process has been most impacted by Internet technology 2-) Should marketing or sales be responsible for generating leads 3-) How does the salesperson determine whether the lead is good prospect

  Do specialization and trade benefit more than one trade

The principle of comparative advantage does not provide answers to certain questions. One of those questions is a. Do specialization and trade benefit more than one party to a trade b. Is it absolute advantage or comparative advantage that really mat..

  Examine behavior of increasing cost industry

Assume you own the remodeling company. You're currently earning short-run profits. The home remodeling industry is an increasing cost industry. In the long run, what do you expect will happen to:

  Consider the following graph and answer questions a through

consider the following graph and answer questions a through e.nbsp if you perform calculations show me your work.a. if

  Explain how that drop in price affects allocative efficiency

How does a generic drug differ from its brand name, previously patented equivalent Explain why the price of a brand name drug typically declines when an equivalent generic drug becomes available Explain how that drop in price affects allocative ef..

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