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Fethe's Funny Hats is considering selling trademarked, orange-haired curly wigs for University of Tennessee football games. The purchase cost for a 2-year franchise to sell the wigs is $20,000. If demand is good (40% probability), then the net cash flows will be $27,000 per year for 2 years. If demand is bad (60% probability), then the net cash flows will be $9,000 per year for 2 years. Fethe's cost of capital is 14%.
A. What is the expected NPV of the project? B. Use decision-tree analysis to calculate the expected NPV of this project, including the option to continue for an additional 2 years.
B. Use decision-tree analysis to calculate the expected NPV of this project, including the option to continue for an additional 2 years.
I would like each of you to independently research one article that talks about an application of CAPM in financial markets
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Assess the information needs of the following decision makers.
You want to have $20,000 for the down payment on a house in 10 years. Your parents have promised to give you $3,000 in two (2) years. How much do you need to set aside today if you can earn an 8% APR with monthly compounding on the money you save and..
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