Determine what is most laura should pay for the asset

Assignment Help Financial Management

Reference no: EM131871541

Laura Drake wishes to estimate the value of an asset expected to provide cash inflows of $3,700 per year at the end of years 1 through 4 and $20,559 at the end of year 5. Her research indicates that she must earn 88?% on? low-risk assets, 1616?% on? average-risk assets, and 2121?% on? high-risk assets.

a. Determine what is the most Laura should pay for the asset if it is classified as? (1) low-risk,? (2) average-risk, and? (3) high-risk.

b. Suppose Laura is unable to assess the risk of the asset and wants to be certain? she's making a good deal. On the basis of your findings in part a?,what is the most she should? pay? Why?

c. All else being the? same, what effect does increasing risk have on the value of an? asset? Explain in light of your findings in part a.

Reference no: EM131871541

Questions Cloud

Large part of the society valued resources : 2.Which of the following was not an influence on the Framers?

What is the cash flow for Nimitz Rental : Nimitz Rental Company provided the following information to its auditors. what is the cash flow for Nimitz Rental?

What was the main point of the speech : What was the main point of the speech? What nonverbal cues did the speaker use to convey his/her message

Article Summary - Impact of Corporate Social Responsibility : Submit a 2-3 page summary of a research article - Impact of Corporate Social Responsibility Dimensions on Firm Value: Some Evidence from Hong Kong and China

Determine what is most laura should pay for the asset : Determine what is the most Laura should pay for the asset if it is classified as? (1) low-risk,? (2) average-risk, and? (3) high-risk.

Video clip on the incentives that sumo wrestlers face : After watching the Freakonomics video clip on the incentives that sumo wrestlers face, it shows that there are times when rational people

Discuss some of the arguments for and against such a law : Some jurisdictions have passed laws prohibiting smoking in cars when children are present. Discuss some of the arguments for and against such a law.

Analyze some of the etiquette factors that should be taken : Analyze some of the etiquette factors that should be taken into consideration in each country when using social media to conduct business.

Actually received from the sale of new common stock : The additional paid-in capital account represents the difference between a sock's par value and the funds actually received from the sale of new common stock.

User Account

All Pages