What is an opportunity cost rate

Assignment Help Financial Management
Reference no: EM131994749

1. What is an opportunity cost rate? How is this rate used in discounted cash flow analysis, and where is it shown on a time line? Is the opportunity rate a single number that is used to evaluate all potential investments?

2. Calculate the price change for a 1-percent decrease in market yield for the following bond: par = $1000; coupon rate = 6 percent, paid semi-annually; market yield = 6 percent; term to maturity = 10 years

Reference no: EM131994749

Questions Cloud

What is the modified duration of this bond : Market yields for this type of bond are 4 percent. What is the modified duration of this bond?
Difference between means of paired data : To test for a difference between means of paired data, we test whether the differences of the paired data could come from a population with mean___________.
Why do organization have information deficiency problem : Why do organization have information deficiency problem? Suggest ways on how to overcome information deficiency problem.
Explain the given points as you understand : In the article, "Everything Changes, or Why MLA Isn't (Always) Right", Walker explains the logic of, or reasoning for, using citations in academic work.
What is an opportunity cost rate : What is an opportunity cost rate? How is this rate used in discounted cash flow analysis, and where is it shown on a time line?
Region with the highest combined growth : Number of partners for 20 firms in the region with the highest combined growth
Weakness of the accounting rate of return approach : Give an example of a strength and a weakness of the accounting rate of return approach.
Provide an explanation of the areas of the lesson : Evaluation of the lesson you selected related to metacognition and comprehension strategies used.
Complete an exercise in business process mapping : This project requires you to complete an exercise in business process mapping. You will use the following scenario for your assignment.

Reviews

Write a Review

Financial Management Questions & Answers

  How much tax do you owe on the interest payment

You purchase a 6 percent $10,000 bond for $9,350 plus $163 in accrued interest for a total outlay of $9,513. Subsequently you receive a $350 interest payment. You are in the 20 percent income tax bracket. How much tax do you owe on the interest payme..

  Is the consumer maximizing utility

The table at right shows the marginal utility a consumer receives from the weekly consumption of On-Demand movie rentals and Thai takeout meals.

  What is the weighted average cost of capital for this firm

The current stock price for company is $45 per share and there are 6 million shares outstanding. what is Weighted Average Cost of Capital (WACC) for this firm?

  Calculate the statistics given below

State of Nature Probability Investment A Return Investement B Return I 0.25 6% 15% II 0.4 9% 12% III 0.35 5% -3% .

  Bonds is appropriate measure for cost of debt

The coupon rate of the firm’s outstanding bonds is an appropriate measure for cost of debt.

  Calculate price of zero coupon bond

Calculate the price of a zero coupon bond that matures in 24 years if the market interest rate is 4.9 percent.

  Find the price Y of the two year zero coupon bonds

A one year zero coupon bonds have a price of 90.00. A two year zero coupon bond has a price of Y. A three year zero coupon bond has a price of 81.22. A three year 10% annual coupon bond has a price of 102.55. All of the bonds have a face and redempti..

  Value after swap and how much of that value will be equity

Frogs Inc., currently has an equity beta of 2.84, is financed with 10% debt (and 90% equity) and has a total firm value of $10 billion. Frogs’ CFO thinks that they should increase the firm’s leverage by issuing $2 billion of debt and buying back $2 b..

  What is yield to maturity at current market

Harrimon Industries bonds have 4 years left to maturity. What is the yield to maturity at a current market price of $881?

  Will the investor be better or worse off at maturity

Consider 8.5 percent Swiss franc/U.S. dollar dual-currency bonds that pay $666.67 at maturity per SF 1,000 of par value. It sells at par. What is the implicit SF/$ exchange rate at maturity? Will the investor be better or worse off at maturity if the..

  Considered as an entity frames and reframes its brand

Why should this concept be something considered as an entity "frames" and/or "reframes" its brand?

  Furthermore firm has currently just one outstanding share

Suppose that the assets of a firm are now priced at $100mil and are driven by a two-state binomial model and that the risk-free rate of interest is zero. Furthermore the firm has currently just one outstanding share. The asset return in the up-node a..

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