Find the appropriate risk-free rate

Assignment Help Financial Management
Reference no: EM131313053

Consider an option that expires in 72 days. The bid and ask discounts on the T-bill are 7.44 and 7.20, respectively. Find the appropriate risk-free rate. For $100 1-yr T-bill.

Reference no: EM131313053

Questions Cloud

Analyzing a proposed project : The Meldrum Co. is analyzing a proposed project. The company expects to sell 3,000 units, give or take 15 percent. The expected variable cost per unit is $8 and the expected fixed costs are $12,500. Cost estimates are considered accurate within a plu..
Calculate the free cash flows for each of the three years : The XYZ company is forecasting that it will generate EBIT of $30K, $40K and $50K in each of the next 3 years. Depreciation is expected to be $3K; $3.5K and $4K in each of the years of the EBIT forecast. Calculate the free cash flows for each of the t..
What is the npv of the new video game : M.V.P. Games, Inc., has hired you to perform a feasibility study of a new video game that requires an initial investment of $7.9 million. M.V.P. expects a total annual operating cash flow of $1.39 million for the next 10 years. What is the NPV of the..
What are the best-case and worst-case npvs : McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $850 per set and have a variable cost of $450 per set. The company has spent $155,000 for a marketing study that determined the company will sell 59,000 sets per year ..
Find the appropriate risk-free rate : Consider an option that expires in 72 days. The bid and ask discounts on the T-bill are 7.44 and 7.20, respectively. Find the appropriate risk-free rate. For $100 1-yr T-bill.
Capital budgeting for net present value : Describe the role a company’s cost of capital plays in capital budgeting for both net present value (NPV) and internal rate of return (IRR) calculations. What are the rules for capital budgeting decisions that are made based on NPV and IRR. Explain h..
What is the present worth of each project : Tempura, Inc., is considering two projects. Project A requires an investment of $34,000. Estimated annual receipts for 20 years are $20,000; estimated annual costs are $12,500. What is the present worth of each project?
Which alternative should be recommended : Xanadu Mining is considering three mutually exclusive alternatives, as shown in the table below. MARR is 7.5 % year. What is the present worth of each alternative? Which alternative should be recommended?
Entertainment expense accounts to property development : Mr. Coleman has asked Ms. Grider to change the names of the Travel and Entertainment Expense accounts to Property Development. He hopes to deflect his father's attention away from the amount he has spent on travel and entertainment until he has prove..

Reviews

Write a Review

Financial Management Questions & Answers

  What is the present equivalent cost of the investment

A machine at a bottling plant that has a first cost of $150,000, operating and maintenance costs of $17,500 per year, and an estimated net salvage value of $25,000 at the end of thirty years. Assume an interest rate of 8%. What is the   present equiv..

  What is the firms net float

ABC Company writes 369 checks a day for an average amount of $381 each. These checks generally clear the bank in 5 days. In addition, the firm generally receives an average of $125,264 a day in checks that are deposited immediately. Deposited funds a..

  Six year old article on the bankruptcy

On a Sunday morning in September 2008, a reader browsing through archived stories in a Florida newspaper came across a six year old article on the bankruptcy of United Airlines (UAL). UAL had declared bankruptcy in 2002 but emerged from it in 2006. T..

  Cost of Common Equity with Flotation

Ballack Co.’s common stock currently sells for $49.00 per share. The growth rate is a constant 11.2%, and the company has an expected dividend yield of 6%. The expected long-run dividend payout ratio is 20%, and the expected return on equity (ROE) is..

  In terms of things going in your favor for an organization

In terms of things going in your favor for an organization, are there any specific financial tools, measurements, financial results that can be observed in order to evaluate whether or not a company is becoming too overextended in the area of leverag..

  The project modified internal rate of return

Modified Internal Rate of Return (MIRR) Adolphus Logistics has a weighted average cost of capital of 10 percent. The company is considering a project with the following expected cash flows: Year Project Cash Flow 0 –$611 million 1 372 million 2 235 m..

  Calculate the current return on a stock

Calculate the current return on a stock of your choice and compare it to returns on bonds. Which is better to invest in presently a stock or a bond in this company and why? Please explain

  Cash of prestopinos cash conversion cycle

Prestopino Corporation produces omtorcycle bateries. Prestopino turns out 1,500 batteries a day at a cost of $6 per battery for materials and labor. It takes the firm 22 days to convert raw mateials into a battery. What is the length of Prestopino's ..

  Compute your total dollar return on this investment

Suppose you bought 300 shares of stock at an initial price of $39 per share. The stock paid a dividend of $.32 per share during the following year, and the share price at the end of the year was $42. Compute your total dollar return on this investmen..

  How long will it take him to pay off the debt

Joey realizes that he has charged too much on his credit card and has racked up $5,200 in debt. If he can pay $175 each month and the card charges 16 percent APR (compounded monthly), how long will it take him to pay off the debt?

  Political influence has exerted upon the budgetary process

Evaluate the level of the impact that political influence has exerted upon the budgetary process overall. Suggest three to four (3-4) strategies that the managers could deploy in order to influence the budget process.

  After-tax cash flows

Find the PI. Cost of capital is 10.2%. The initial outlay is $256, 900. The following after-tax cash flows:

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