User Account

All Pages

How much should you charge for the option

Assignment Help Finance Basics
Reference no: EM131166176

You own a lot in Key West, Florida, that is currently unused. Similar lots have recently sold for $1,270,000. Over the past five years, the price of land in the area has increased 7 percent per year, with an annual standard deviation of 36 percent. A buyer has recently approached you and wants an option to buy the land in the next 12 months for $1,420,000. The risk-free rate of interest is 5 percent per year, compounded continuously.

How much should you charge for the option?

Reference no: EM131166176

Questions Cloud

Describe the tangible and intangible values : Locate a news article in an IT trade magazine about an organization that is implementing a new computer system. Describe the tangible and intangible values that the organization likely will realize from the new system.
Write pseudocode to decode a message that has been encoded : convert that number to base 8. Continue this processing with each block of three consecutive letters. Append the blocks, using either an 8 or a 9 to separate the blocks. Finally, reverse the number, and replace each digit 5 by two 5's.
Was it covered by the ucc or the common law : Is it express or implied? Did it involve promissory estoppel which is a substitute for an enforceable contract? Was it covered by the UCC or the common law?
Create system request that you use to develop a sales system : Create a system request that you might use to develop a Web-based sales system. Remember to list special issues that are relevant to the project.
How much should you charge for the option : You own a lot in Key West, Florida, that is currently unused. Similar lots have recently sold for $1,270,000. Over the past five years, the price of land in the area has increased 7 percent per year, with an annual standard deviation of 36 percent..
Discuss the arguments that ben and matt will each make : Discuss the arguments that Ben and Matt will each make if the claim is brought. Provide full analysis. Mere conclusions without full analysis will receive little credit. Assume Ben will sue for breach of an express contract (that there was an offe..
What is the net after-tax return : Suppose a bank has found bank qualified municipal bonds which have a nominal grossrate of return of 8 percent and that it can borrow funds needed for this purchase at a rate of 6.25percent. This bond is in the 35 percent tax bracket. What is the n..
Does it make sense to construct a histogram : Does it make sense to construct a histogram for the state of residence of randomly selected individuals in a sample?
Create a cost-benefit analysis that illustrates the return : Suppose that you are interested in buying yourself a new computer. Create a cost-benefit analysis that illustrates the return on investment that you would receive from making this purchase.

Reviews

Write a Review

Finance Basics Questions & Answers

  Detailing the cost

The buying department has found an excellent global positioning system circuit card in Germany that can provide your company with a competitive advantage in the marketplace.

  Does the concept of revenue less expense equaling an

does the concept of revenue less expense equaling an increase in equity or fund balance make sensenbsp to you? if not

  Perform a complete financial analysis of the organizations

research the latest two years of financial statements for a publicly-traded organization based in the u.s. obtain the

  Currency swap and spot exchange rate

ABC Corp. entered into a currency swap with its bank, providing that ABC borrows $5 million at 10% and swaps for a 12% yen loan.

  Find correct statement regarding 401(k) plan

Determine the correct statement regarding 401(k) plan.

  Calculate your monthly principal and interest payment

Calculate your monthly principal and interest payment? What is the APR (actual/true/effective rate of interest) on the loan?

  What is the cost of equity capital for sabrina

Sabrina's just paid an annual dividend of $0.88 per share. This dividend is expected to increase by 4 percent annually. Currently, the firm has a beta of 0.87 and a stock price of $22.78 a share. What is the cost of equity capital for Sabrina's..

  Minimum cost cash balance

If Halliday can holdmarketable securities that yield 5 percent, and then convert thesesecurities to cash at a cost of only the $2 deposit charge, what isthe total cost for one year of holding the minimum cost cash balance according to the Baumol m..

  What does bill believe the inflation rate

An investment offers a 13 percent total return over the coming year. Bill Bernanke thinks the total real return on this investment will be only 7 percent.

  X ltd has a liquid ratio 73 value of stock is rs 25000 and

x ltd has a liquid ratio 73 value of stock is rs 25000 and its current liabilities rs 75000. compute the current

  Operating at a negative to you still get taxed

Interest 60000and tax rate 35%. What is net loss and what is operating cash flow.? So, I calculated EBIT - 155000, EBT - 215000 Here should taxes be 35% of EBT? Confused . If you are operating at a negative to you still get taxed?

  Describe common mental decision biases and how they are

describe common mental decision biases and how they are likely to bias npv

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