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Otobai Company in Osaka, Japan is considering the introduction of an electrically powered motor scooter for city use. The scooter project requires an initial investment of ¥17 billion. The cost of capital is 10%. The initial investment can be depreciated on a straight-line basis over the 10-year life of the project. Profits are taxed at a rate of 50%. Consider the following project estimates: Market size 1.3 million Market share .1 Unit price ¥ 600,000 Unit variable cost ¥ 560,000 Fixed cost ¥ 2.2 billion What is the NPV of the electric scooter project? (A negative amount should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer in billions rounded to 3 decimal places.) Net present value ¥ _________ billion
The bonds would have an 8.00% annual coupon, and each bond could be converted into 20 shares of common stock. The required rate of return on an otherwise similar nonconvertible bond is 10.00%. What is the estimated floor price of the convertible a..
Courts recognize that they must discount awards of lost future profits in contract disputes to avoid overcompensating the plaintiff. The required return to equity capital is not directly observable. Different asset pricing models can be used to estim..
A company has 3 million shares of common stock outstanding, it earns 12 percent after taxes on annual sales of $35 million, and has a dividend payout ratio of 40 percent; the stock trades at $14 per share.
The expected pretax return on three stocks is divided between dividends and capital gains. Assume the expected dividend is a level perpetuity.
Howell Petroleum, Inc., is trying to evaluate a generation project with the following cash flows: Year Cash Flow 0 –$38,000,000 1 57,500,000 2 –13,000,000 Required: (a) If the company requires a 11 percent return on its investments, what is the NPV o..
Without trading, the portfolio weights will decrease for the stocks in the portfolio whose returns are above the overall portfolio return.The expected return of a portfolio is simply the weighted average of the expected returns of the investments wit..
The risk-free rate of interest is 3.75%. By how much does Beale's required return exceed Foley's required return?
The current price of a stock is $21. In 1 year, the price will be either $27 or $15. The annual risk-free rate is 6%. Find the price of a call option on the stock that has a strike price is of $25 and that expires in 1 year.
The rate that can be locked in for the period between six months and nine months using an FRA is 7%. - What arbitrage opportunities are open to the bank? All rates are continuously compounded.
If the return on the market is 10% and the risk-free rate is 3%, then what is the systematic risk of this firm?
In an automobile insurance policy, the only limit of liability
What kind of random variable will you use the model “the number of trucks that arrive each day”?
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