The cash flow follows normal distribution

Assignment Help Financial Management
Reference no: EM131070796

Using a simulation technique calculate Pr(NPV> $250,000) and Pr(NPV<= $0) for the following problem. Assume all the cash flow follows normal distribution. (7 points) Initial investment (CF0): negative $300,000 (certain cash flow) CF1? expected number $200,000, standard deviation $100,000 CF2? expected number $200,000, standard deviation $110,000 CF3? expected number $200,000, standard deviation $121,000

Reference no: EM131070796

Questions Cloud

Affect the price you receive for bottle of wine : Suppose you are the manager of a California winery. How would you expect the following events to affect the price you receive for a bottle of wine? Explain your answers. a. The price of a comparable French wine decreases. b. One hundred new wineries ..
About the postal service : Consider a project to supply 117 million postage stamps per year to the U.S. Postal Service for the next five years. You have an idle parcel of land available that cost $2,070,000 five years ago; if the land were sold today, it would net you $2,270,0..
Portfolio with the same risk as the market : Stock J has a beta of 1.4 and an expected return of 14%, while Stock K has a beta of 0.8 and an expected return of 11%. You want a portfolio with the same risk as the market. How much will you invest in each stock? What is the expected return of your..
Two different industries and compare their capital structure : What are some practical limitations for a company in trying to maximize the amount of leverage (debt) used in the capital structure? Choose two companies in two different industries and compare their capital structure? Is there anything about the par..
The cash flow follows normal distribution : Using a simulation technique calculate Pr(NPV> $250,000) and Pr(NPV
Use to meet the liquidity needs of the estate : Describe a situation for which an executor must have immediate cash needs for an estate; use an example in the recent news to illustrate. Then, choose one of the three methods that an executor can use to meet the liquidity needs of the estate. Be spe..
Straight leases and lease-purchase arrangements : Round Table Rental Yards provides construction equipment, trailers, crutches, etc., on short term rentals. Historically, Art, the owner, has purchased the items that he rents out, but his business has been expanding so rapidly that he is also conside..
What is the portfolio beta : You own a stock portfolio invested 15% in Stock Q, 25% in Stock R, 40% in stock S, and 20% in Stock T. The betas for these four stocks are .8, .9, 1.3, and 1.6, respectively. What is the portfolio beta?
Why are some risks non-diversifiable : In broad terms, why is some risk diversifiable? Why are some risks non-diversifiable? Does it follow that an investor can control the level of unsystematic risk in a portfolio, but not the level of systematic risk?

Reviews

Write a Review

Financial Management Questions & Answers

  Provided a return of a percent it was financed by dip cost

In March 2010 hertz pain relievers buy a massage machine that provided a return of a percent it was financed by dip cost 7% in August 2010 Mr. hurts came up with a heating compound would have a return of 14% the chief financial officer Mr. Smith told..

  Discuss how the organization can capitalize on the

bull write a brief company history including a mission statement if available.section iibull thoroughly explain at

  Fund average standard deviations betas

The risk-free rate, average returns, standard deviations, and betas for three funds and the S&P 500 are given below: Fund Average Standard deviations Betas

  About expansion-investment in net operating working capital

Truman Industries is considering an expansion. The necessary equipment would be purchased for $9 million, and the expansion would require an additional $1 million investment in net operating working capital. The tax rate is 40%. What is the initial i..

  Initial cost of plant if company raises equity externally

Sheaves Corp. has a debt−equity ratio of .8. The company is considering a new plant that will cost $118 million to build. When the company issues new equity, it incurs a flotation cost of 8.8 percent. The flotation cost on new debt is 4.3 percent. Wh..

  Forecasts of the company year-end inventory turnover ratio

Jasper Furnishings has $275 million in sales. The company expects that its sales will increase 10% this year. Jasper's CFO uses a simple linear regression to forecast the company's inventory level for a given level of projected sales. What are your f..

  The yield on corporate bond

The yield on a corporate bond is 9%, and it is currently selling at par. The marginal tax rate is 30%. A par value municipal bond with a coupon rate of 5.75% is available. Which provides a better return to the investor?

  Financial distress different from agency benefit of leverage

What are agency costs, and how are agency costs of financial distress different from agency benefits of leverage? Explain their impact on calculating the value of a firm with financial distress.

  What was the firms cash flow from operating activities

In 2012, MacDonald and Sons had net income of $–80,000. If accruals increased by $50,000, receivables and inventories rose by $150,000, and depreciation and amortization totaled $30,000, what was the firm’s cash flow from operating activities?

  How much would you pay for the stock today

You are planning to purchase the stock of Ted's Sheds Inc. and you expect it to pay a dividend of $3 in 1 year, $4.25 in 2 years, and $6.00 in 3 years. You expect to sell the stock for $100 in 3 years. If your required return for purchasing the stock..

  Marketing variable costs not increase total variable costs

Why do higher marketing variable costs not increase total variable costs on the income statement? Select One Save Answer A. Marketing costs are considered period costs on the income statement

  Exchange rate of euro in japanese yen

Assume the following information: Exchange rate of Japanese yen in U.S. $ = $.011 Exchange rate of euro in U.S. $ = $1.40 Exchange rate of euro in Japanese yen = 140 yen What will be the yield for an investor who has $1,000,000 available to conduct t..

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