What is the main assumption

Assignment Help Finance Basics
Reference no: EM131234334

a. What is the main assumption that allows you to independently consider investment (project) choices without regard to when you need wealth (or how much money you currently have at hand)?

b. You have $500 and really, really want to go to the Super bowl tonight (which will consume all your funds). You cannot wait until your project completes: The project costs $400 and offers a rate of return of 15%, although equivalent interest rates are only 10%. What should you do?

Reference no: EM131234334

Questions Cloud

What is the 5 year holding rate of return : What is the 5-year holding rate of return, and how can you compute the forward interest rate for a 2-year investment beginning on December 31, 2007, and ending on December 31, 2009?
How can such a misallocation be avoided : Why is it often suggested that imperfect information will result in a misallocation of resources? How can such a misallocation be avoided?
What do you understand by a negative externality : What do you understand by a ‘negative externality'? Consider the impacts of a negative externality on resource allocation and the policies which might be used to ‘correct' it.
What is the price of the bond : A bond has a coupon rate of 10.4 percent and 2 years until maturity. If the yield to maturity is 9.8 percent, what is the price of the bond? (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "tiny_mce_markerq..
What is the main assumption : What is the main assumption that allows you to independently consider investment (project) choices without regard to when you need wealth.
What is meant by marginal social-cost pricing : Outline the benefits and problems of introducing a comprehensive scheme of marginal social cost pricing.
What are the responsibilities and expertise of each manager : What are the responsibilities and expertise of each manager? What role will they play in managing personnel and resources
Advertise on monthly-compounded loans : If you ran a bank, which rate would you rather advertise on monthly-compounded loans, the EAR or APR? Which rate would you rather advertise on quarterly-compounded savings accounts, the EAR or APR?
What is the irr of a project : From memory, write down the equation that defines IRR. -  What is the IRR of a project that costs $1,000 now and produces $1,000 next year?

Reviews

Write a Review

Finance Basics Questions & Answers

  Estimating a population proportion

What sample size is needed to give a margin of error within +- 2% in estimating a population proportion with 90% confidence? We estimate that the population proportion is about 0.35.

  Hydra has 113 billion in debt outstanding a market

hydra multinational is a vast conglomerate firm involved in a wide array of business ventures ranging from satellite

  Can you share an example of an internal control

What are some internal controls in place at your organization? Can you share an example of an internal control failure at your organization? Why did this failure occur?

  A two-year zero-coupon treasury bond with a maturity value

a two-year zero-coupon treasury bond with a maturity value of 1000 has a price of 873.4387. a one-year zero-coupon

  Angiletta corporation-pv of future cash flows

Angiletta Corporation is considering the new project requiring $30,000 investment in test equipment with no salvage value. Calculate the net present value of investment if straight-line depreciation is used. Use 10% as the discount rate.

  Determine the single most impactful

From international tax planning and researching, determine the single most impactful or interesting thing you can learn about it.

  Earnings in the firm to finance growth

Chastain's Gardening Supplies, Inc. is a young start-up company. It plans to pay no dividends over the next five years because it needs to reinvest all earnings in the firm to finance growth.

  Finding the correct statements

The best way to judge the effectiveness of a company cash management procedures is to look at the ratio of its cash balances to its sales. The higher this ratio, the more effective the firm's cash management procedures are.

  What is the intrinsic value of the call

A particular call is the option to buy stock at $25. It expires in six months and currently sells for $4 when the price of the stock is $26. What is the intrinsic value of the call? What is the time premium paid for the call

  Find the prepaid forward price and the forward price

Find the prepaid forward price and the forward price of a 30 month forward contract for a stock currently priced at $36, assuming that the risk free rate is 4% compounded continuously and that dividends are paid at continuous annual rate of 2.5%.

  What is the npv of accepting the lockbox agreement

What is the NPV of accepting the lockbox agreement? (Round your answer to 2 decimal places)

  Engaging in the time value of money discussion

Engaging in the time value of money discussion

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