What is the expected value of each investment

Assignment Help Financial Management

Reference no: EM131047742

You are trying to decide whether to invest some idle cash in undeveloped land or gold. You intend to hold either investment for 5 years before selling out and sailing the Caribbean. You have made the following estimates of the value of the land and gold 5 years from now:

Land

Probability Cash Flow

0.2 $60,000

0.5 $80,000

0.3 $100,000

Gold

Probability Cash Flow

0.3 $40,000

0.4 $85,000

0.3 $140,000

1) What is the expected value of each investment?

Reference no: EM131047742

Questions Cloud

An individual medical insurance policy covering : Jennifer, age 28, is divorced and has a son, age one. Six months ago, Jennifer purchased an individual medical insurance policy covering the entire family. Her son was recently diagnosed with congenital heart disease.

Purchase zero coupon bond : You are looking to purchase a zero coupon bond. The bond has 10 years until maturity and you require an 8% annual rate of return. What should you pay for this bond? You just purchased a bond for $974.42 that matures in 5 Years. The bond was originall..

What is the predicted price change for your bond : The duration of GE bond you own is 6.00 years. Currently, interest rates are 7.00%, but you believe the Fed is about to increase interest rates by 24.00 basis points. What is the predicted price change for your bond?

How the partners split profits and losses : How the partners split profits and losses, how the partnership is dissolved. Feel free to make up portions of your partnership agreement or necessary facts.

What is the expected value of each investment : You are trying to decide whether to invest some idle cash in undeveloped land or gold. You intend to hold either investment for 5 years before selling out and sailing the Caribbean. You have made the following estimates of the value of the land and g..

Managing a pension fund whose liabilities : You are managing a pension fund whose liabilities have average duration of 13 years. You want to immunize the interest rate risk and are considering 6-year maturity zero-coupon bonds and 4.00% yield perpetuities. How much of the portfolio should you ..

Determine price elasticity of demand : Evaluate Eskoms products in terms of the availability of close substitutes

What alternative capital structure would you recommend : Assuming Pacific Energy Limited's credit rating is AAA, what alternative capital structure would you recommend lowering the cost of capital to the company

How would you go about dissolving presidents co : Review your book regarding corporate dissolution. How would you go about dissolving Presidents Co.? The answer should be fairly simple, I am just looking for a way to dissolve the company.

User Account

All Pages