What is the incremental cost of funds on asset

Assignment Help Business Economics

Reference no: EM13798070

Suppose you have three indivisible assets, A, B and C with internal rates of return 2%, 5% and 10% respectively and initial costs of $1, $4, $5.

Suppose you have $8.0 at 1% and can borrow at 8%. What is the incremental cost of funds on asset B? Show work

Reference no: EM13798070

Questions Cloud

Explain the major options available to a bank : How do stock prices behave if stock markets are efficient and if investors do not care about risk? Explain the major options available to a bank that is short of reserves. What determines which option a bank is likely to choose? How can the Fed affec..

What is the current price of this bond : A $1000 face value bond has a 6.85 percent semi-annual coupon and sells dor $980.00. What is the current yield? A 7 percent coupon bond has a face value of $1000 and pays interest annually. The current yield is 6.8 percent. What is the current price ..

Best example of a government sanctioned monopoly : 1. Which of the following is the best example of a government sanctioned monopoly? a. a public utility company. b. a k-12 public education school district. c. a newly patented drug. d. Microsoft's Windows products. e. All are very good examples of su..

Consider the fictitious good derp : Consider the fictitious good Derp. The demand for Derp is Q = 1200 - 2P. Suppose the supply of Derp is given by Q = -600 +2P. What is the equilibrium price of Derp? What is the equilibrium quantity of Derp? What is the price elasticity of demand at t..

What is the incremental cost of funds on asset : Suppose you have three indivisible assets, A, B and C with internal rates of return 2%, 5% and 10% respectively and initial costs of $1, $4, $5. Suppose you have $8.0 at 1% and can borrow at 8%. What is the incremental cost of funds on asset B?

Capital budgeting problem-investment combinations : Assuming you have a capital budgeting problem with 6 investment options, what is the maximum number of investment combinations you would have to test? Calculate. Show work

What is the highest loan rate that would support investing : Suppose you have an asset that costs $11 in time period zero and has an IRR of 18%. With a retained earning rate of 5% on your remaining $7, what is the highest loan rate that would support investing in this asset? Calculate.

Calculate new long-run equilibrium values for income-prices : In the year of the shock, compute the value of GDP, price level, interest rates, and real money supply. Hint: Derive IS and LM equations to find GDP and interest rates. Calculate the new long-run equilibrium values for income, prices, interest rates,..

Draw the production possibilities frontier : An economy consists of three workers: Larry, Moe, and Curly. Each works for ten hours per day and can produce two services: Mowing lawns and washing cars. Calculate how much of each service is produced under the following circumstances. You can use a..

User Account

All Pages