Three potential paths with equal probability

Assignment Help Financial Management
Reference no: EM131952818

The price of a unit to be manufactured can follow one of three potential paths with equal probability

Path Period 0 Period 1 Period 2

A $35.00 $40.00 $45.00

B $35.00   $40.00   $40.00

C $35.00 $35.00   $35.00

D $35.00 $30.00 $25.00  

Suppose that after period 1 the price is $35.00 or $30.00, then what is the NPV of investing the second half od the $12,800? What is the NPV ($35) and NPV ($30)

Reference no: EM131952818

Questions Cloud

Huge ipo being carried out by leading technology company : She has read a number of newspaper articles about a huge IPO being carried out by a leading technology company.
What is the expected cash inflow : The price of a unit to be manufactured can follow one of three potential paths with equal probability. What is the expected cash inflow?
Who wants to be millionaire : Who wants to be a millionaire?
Healthcare finance and impact on surrounding communities : Discuss your understanding of healthcare finance and its impact on surrounding communities.
Three potential paths with equal probability : The price of a unit to be manufactured can follow one of three potential paths with equal probability
You will place to enter on the short side at higher price : If the current market price looks too low, what order you will place to enter on the short side at a higher price?
Estimate selling price of the land in the year of disposal : Estimate selling price of the land in the year of disposal.
What is market-to-book ratio and price earnings ratio : What is the price-earnings ratio? What is the book value per share? What is the market-to-book ratio?
Compute your total dollar return on investment : Suppose you bought 100 shares of stock at an initial price of $37 per share. Compute your total dollar return on this investment.

Reviews

Write a Review

Financial Management Questions & Answers

  Use the NORMDIST function in Excel

Suppose the average return on an asset is 11.5 percent and the standard deviation is 20 percent. Further assume that the returns are normally distributed. Use the NORMDIST function in Excel to determine the probability that in any given year you will..

  Formulate and solve the location problem

Formulate and solve the location problem by assuming 200 working days in a year and a transport cost per km equal to € 0.95.

  No dividends will be paid on the stock over next nine year

Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next nine years because the firm needs to plow back its earnings to fuel growth. The company will pay a $10 per share dividend 10 years from today ..

  What issues should be looked at when considering this offer

IBM has made a tender offer for Oracle of $21.00 per share. What issues should be looked at when considering this offer?

  What dollar amount of deposits can the bank have

A new bank has vault cash of $1 million and $5 million in deposits held at its Federal Reserve District Bank. If the required reserves ratio is 8 percent, what dollar amount of deposits can the bank have

  What is tom effective annual rate

During the year the stock paid dividends of $6.04 per share. What is Tom’s effective annual rate?

  Calculate best-case and worst-case NPV figures

We are evaluating a project that costs $670,000, has a five-year life, and has no salvage value. Calculate the best-case and worst-case NPV figures.

  What is the value of the bond

The face value of the bond is $1,000, the coupon rate 10% with annual compounding, and the bond matures in 10 years. What is the value of the bond?

  Good financial health and was able to get coupon rate

When AFA issued the bonds it was in good financial health and was able to get a coupon rate of 6.6%.

  What does the beta of the new security have to be

You currently own a portfolio valued at $16,000 that has a beta of 1.2. You have another $8,000 to invest and would like to invest it in a manner such that the risk of your portfolio matches that of the overall market. What does the beta of the new s..

  Four funds from the low-fee mutual fund families

Find two to four funds from the following low-fee mutual fund families: Dreyfus, Fidelity, Franklin, T Rowe Price and Vanguard.

  What is the value of cassandra to adrian

The synergy of the acquisition is $22,500. What is the value of Cassandra's to Adrian's?

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