Which project would you pick

Assignment Help Business Management
Reference no: EM132077587

Question 1:

a) Assume that you will deposit $4000 at the end of each of the next three years in a St. George bank account paying 8% interest. You currently have $7000 in the account. How much will you have in three years? In four years?

b) You are looking into an investment that will pay you $12,000 per year for the next 10 years. If you require a 15% return, what is the most you would pay for this investment?

c) A bond has an 8% coupon, paid semi-annually. The face value is $100, and the bond matures in 6 years. If the bond currently sells for $91.137, what is the yield to maturity? What is the effectiveannual yield?

Question 2:

We have two investment projects A&B. Both projects cost $250, and we require a 15% return of the two investments.

Year     A  B

1        $100                            $100     

2                              $100                      $200

3                              $100                      0

4                              $100                      0

a) Based on the payback period rule, which project would you pick? Explain.

b) Based on the NPV rule, which project would you pick? Explain.

c) Do a) and b) give you the same conclusion? If not, why? Please elaborate.

d) What other methods can you use to evaluate proposed investments? Please explain.

Question 3:

The ABC Company has a WACC of 20%. Its cost of debt is 12%, which is equal to the risk-free rate of interest. If ABC's debt to equity ratio is 2, what is the cost of equity capital? ABC's equity beta is 1.5.

a) What are the M&M propositions I, II and III, please use graphs/charts and words to explain.

b) Based on the M&M proposition II, what is the beta of the entire firm?

Reference no: EM132077587

Questions Cloud

Analyze four different models of ethical decision making : A human services administrator is responsible for overseeing professionals belonging to diverse disciplines who work together in one agency.
Production of a new small appliance : A firm plans to begin production of a new small appliance. The manager must decide whether to purchase the motors for the appliance
Discuss in detail the experiences of the people featured : Provide an introduction or synopsis of the overall topic of the video. Discuss in detail the experiences of the people featured in this video.
Analyze two of the significant external barriers : Analyze two (2) of the significant external barriers that GE Healthcare faced when trying to meet its marketing goals in the Indian market.
Which project would you pick : a) Based on the payback period rule, which project would you pick? Explain. b) Based on the NPV rule, which project would you pick? Explain.
What defines communities that have low status consistency : What defines communities that have low status consistency? What are the ramifications, both positiveand negative, of cultures with low status consistency?
What is HRM and Explain the functions of HRM : What is HRM? Explain the functions of HRM? Explain the concept of training & development with different methods of training
Corporate objectives and approaches to marketing : This assessment is designed to engage you in the subject and to begin to develop an understanding of central issues in marketing.
What is your recommendation for each type of book : What is your recommendation for each type of book? Why? How much safety stock should be held, by type of book? What is the total cost of your recommendation

Reviews

Write a Review

Business Management Questions & Answers

  Caselet on michael porter’s value chain management

The assignment in management is a two part assignment dealing 1.Theory of function of management. 2. Operations and Controlling.

  Mountain man brewing company

Mountain Man Brewing, a family owned business where Chris Prangel, the son of the president joins. Due to increase in the preference for light beer drinkers, Chris Prangel wants to introduce light beer version in Mountain Man. An analysis into the la..

  Mountain man brewing company

Mountain Man Brewing, a family owned business where Chris Prangel, the son of the president joins. An analysis into the launch of Mountain Man Light over the present Mountain Man Lager.

  Analysis of the case using the doing ethics technique

Analysis of the case using the Doing Ethics Technique (DET). Analysis of the ethical issue(s) from the perspective of an ICT professional, using the ACS Code of  Conduct and properly relating clauses from the ACS Code of Conduct to the ethical issue.

  Affiliations and partnerships

Affiliations and partnerships are frequently used to reach a larger local audience? Which options stand to avail for the Hotel manager and what problems do these pose.

  Innovation-friendly regulations

What influence (if any) can organizations exercise to encourage ‘innovation-friendly' regulations?

  Effect of regional and corporate cultural issues

Present your findings as a group powerpoint with an audio file. In addition individually write up your own conclusions as to the effects of regional cultural issues on the corporate organisational culture of this multinational company as it conducts ..

  Structure of business plan

This assignment shows a structure of business plan. The task is to write a business plane about a Diet Shop.

  Identify the purposes of different types of organisations

Identify the purposes of different types of organisations.

  Entrepreneur case study for analysis

Entrepreneur Case Study for Analysis. Analyze Robin Wolaner's suitability to be an entrepreneur

  Forecasting and business analysis

This problem requires you to apply your cross-sectional analysis skills to a real cross-sectional data set with the goal of answering a specific research question.

  Educational instructional leadership

Prepare a major handout on the key principles of instructional leadership

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