User Account

All Pages

Calculate the expected return on the investment

Assignment Help Financial Accounting
Reference no: EM132790224

You own a well-diversified portfolio. You are considering a small investment in a local start-up founded by a family member.

  • Your best guess is that the start-up has a 30% chance of succeeding-in which case the return is estimated to be 400%--and a 70% chance of failing, in which case you will lose your entire investment (i.e., the return will be -100%.)
  • The current risk-free rate is 2% per year, and the expected market risk premium is 6% per year.

Problem 1: Calculate the expected return on the investment.

Reference no: EM132790224

Questions Cloud

What is the gdp per capita of france : The GDP per capita of the United States is approximately $62,795/person while the GDP (in total) of France is 2,285.9 billion Euros and the population of France
Calculate the annualized rate of inflation : When the U.S. went into partial lockdown and consumers were afraid to leave their homes demand for many products crashed. It is probably not surprising
Make the shareholders equity section of the statement : Make the shareholders' equity section of the statement of financial position in good form. Assume that the common shares and preferred shares are no par.
Salary for 1973 equivalent to in 2008 : What was the salary for 1973 equivalent to in 2008 dollars if you adjusted for inflation using the CPI?
Calculate the expected return on the investment : Calculate the expected return on the investment. The current risk-free rate is 2% per year, and the expected market risk premium is 6% per year.
How would they relate to aggregate demand and aggregate : Keynes' Law and Say's Law. How do they differ and how are they the same? Also, how would they relate to aggregate demand and aggregate supply?
PD 121 - Professional Development Assignment : PD 121 - Professional Development Assignment Help and Solution - Herzing University, USA - Homework Help
Calculate the annualized rate of inflation : When the U.S. went into partial lockdown and consumers were afraid to leave their homes demand for many products crashed.
What is the best source of funds : What its funding needs are, what is the best source of funds? Should it be from internal cash flows, should it be from debt, should it be from external equity

Reviews

Write a Review

Financial Accounting Questions & Answers

  Prepare adjusting entries-depreciation on equipment

A company has a fiscal year-end of December 31: (1) on October 1, $12,000 was paid for a one-year fire insurance policy; (2) on June 30 the company lent its chief financial officer $10,000; principal and interest at 6% are due in one year; and (3) eq..

  Illustrate what amount must she include in gross income

Using the taxpayer's age at the time the payments begin, the taxpayer's number of expected monthly payments is 260. Of the $11,000 in pension benefits the taxpayer received during the current year, illustrate what amount must she include in gross ..

  What is the initial value of company debt

Company is about to launch a new product. Depending on the success, What is the initial value of Company's debt?What is the initial value of Company's debt?

  What will be the gain or loss

XYZ stock is selling for $35 a share. What will be the gain/ loss if you exercise a) call option and b) put option

  Wages consolidated construction pays to their welders

Consolidated Construction obtained a job working for a nearby international airport, a project contracted with the federal government for $500,000, welding the support structures for the new extension of the terminal. What laws govern the wages Conso..

  What are the investments payback period irr and npv

What are the investment's payback period, IRR, and NPV, assuming the firm's WACC is 9%? If the firm requires a payback period of less than 4 years, should this project be accepted? Be sure to justify your choice.

  What does goodwill represent

How does goodwill arise and come to be reported on the balance sheet? How is the amount calculated? What does goodwill represent? Will we tend to see a higher or lower amount of goodwill in slower economic times? Explain.

  Determine the proper accounting treatments

Contingencies: Greenlaw Inc., a publishing company, is preparing its December 31,2016, financial statements and must determine the proper accounting treatments for each of the situations:  For each of the preceding situations, prepare the journal ent..

  What is the finance lease

The present value of the lease payments for the lessor and lessee is $20,500. The first payment was made the day the lease was signed. What is the finance lease

  Standard fraud risk assessment questionif someone did want

standard fraud risk assessment questionif someone did want to commit fraud and not be caught how would they do it?one

  Calculate the accounts receivable turnover

Calculate the accounts receivable turnover and average collection period for 2011. (Use "Net Product Sales." Assume all sales were credit sales.)

  Compute the ending inventory value using the lifo method

Compute the ending inventory value using the LIFO method. DATE 2 JAN; DESCRIPTION: INITIAL INVENTORIES ; QUANTITY: 250 UNITS ;PRICE: IDR 10,000

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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