risk" factor

Q: A consulting company is buying a new computer system for their headquarters for $175,000. The asset…

A: New Computer Cost = $175,000 Asset Life = 5 Years

Q: Tannen Industries is considering an expansion. The necessary equipment would be purchased for $10…

A: Initial investment also referred to as the initial investment outlay is the amount required to start…

Q: This question is based on the following information: Each of the three independent investments below…

A: Present worth (NPV) is one of the techniques of capital budgeting analysis. NPV will be the…

Q: In practice, a common way to value a share of a stock when a company pays dividends is to value the…

A: Stock price is defined as the maximum price that an investor is ready to pay for a stock. It is…

Q: Harper takes out a loan of $126,500,000, which is to be repaid by annual payments for 25 years. The…

A: Loan (L) = $126,500,000 n = 25 years Growth rate (g) = 20% r = 11% First payment = P

Q: You are considering buying common stock in Grow On, Inc. You have projected that the next dividend…

A: Formula Stock price = D1/(i-g) Where D1 - Next dividend i.e. $8.60 i - Required return i.e. 16.0% g…

Q: Dearborn Supplies has total sales of $206 ​million, assets of $94 ​million, a return on equity of…

A: Net income = Profit margin * Sales = 0.078 * $206 million = $16.068 million Equity = Net income /…

Q: Price Forward Dividend 1T Target Est $86.36 $2.08 $105.28 Given the information in the table, if the…

A: Calculation of the current price of the stock based on the estimated or actual dividend payments is…

Q: 16. Use Table 11-2 to solve the problem. How much (in $) must be invested today at 6% compounded…

A: Future value (FV) = $7000 Interest rate = 6% Quarterly interest rate (r) = 6%/4 = 1.50% Period = 3…

Q: What is the relation between the present value of an investment and time and interest rate?

A: The concept of present value of an investment and time and interest rate is an important concept of…

Q: he Everly Equipment Company's flange-lipping machine was purchased 5 years ago for $55,000. It had…

A: Machine purchased 5 years ago = $55,000 Expected life = 10 years Depreciation on machine = $5,500…

Q: The balance sheet for Larry Underwood Motors shows a book value of​ stockholders' equity​ (book…

A: Shareholders/ Owner’s equity: The shareholders are the owners of the company and the shareholders…

Q: Two mutually exclusive investment projects have the following forecasted cash flows: Year A B 0…

A: The projects or investments are termed to be mutually exclusive when the acceptance given for one…

Q: do we need to check   the credit worthiness of credit customers before granting their credit…

A: Giving credit to the business and customers is main earning sources for banks but they need to take…

Q: To purchase s11,700 worth of lab equipment for her business, Jenny made a down payment of s1600 and…

A: This is the case of an amortized loan. An amortized loan is that loan in which the periodic payments…

Q: Suppose you buy a one-year forward contract at $65. At expiration, the spot price is $73. The…

A: Value of the contract at expiration = Spot price - Futures price * e-(risk free rate * Time to…

Q: Although the Chen Company's milling machine is old, it is still in relatively good working order and…

A: Here, Cost of Machine is $106,000 Life of Equipment is 10 years After Tax Cash flows is $19,600 Cost…

Q: Yoko invested s4000 in a fund for 2 years and was paid simple interest. The total interest that she…

A: Investment (P) = $4000 Period (T) = 2 Years Interest amount (I) = $400

Q: An amortization of a debt is in a form of a gradient series of P5,000 on the first year, P4,500 on…

A: Interest = 0.17 Year Amortization 1 5000 2 4500 3 4000 4 3500

Q: Project L requires an initial outlay at t = 0 of $66,000, its expected cash inflows are $13,000 per…

A: Payback period is the amount of time required to recover initial investment. Payback period =Initial…

Q: Dr. Sheldon Lee Cooper plans to purchase an equipment for his small physics display museum amounting…

A: The equivalent annual receipts and costs throughout the period of a project are known as equivalent…

Q: Company Dividend Yield Dividend next year Chesapeake Energy Corp 7.91% $1.74 What is Chesapeake's…

A: Dividend yield = 7.91% Dividend next year = $1.74

Q: QUESTION 3: TIME VALUE OF MONEY You plan to buy a car that has a total cost of RM80,700. You will…

A: Present Value of Ordinary Annuity refers to a concept that determines the value of cash flows at…

Q: Solved Manually. Taylor Swift, a college student of USeP decides to get a student loan amounting to…

A: Loan amount = $4000 Interest rate = 5% Monthly interest rate = 5%/12 = 0.416666666666667% Monthly…

Q: A small bridge can be constructed for $ 20,000 with a life of 30 years, after which it can be…

A: Initial cost = $20000 n = 30 years Annual cost = $1000 for 5 years, $1500 thereafter r = 12%

Q: Capital structure​ analysis)  The liabilities and​ owners' equity for Campbell Industries is found​…

A: The percentage of assets funded by liabilities is calculated as debt ratio of the firm.

Q: A stock currently is being sold for $95, with a dividend yield of 6.2% and a dividend growth rate of…

A: SOLUTION : GIVEN, Dividend yield = 6.2% Growth rate = 4.2% Share price = $95   Now, Firstly we have…

Q: What is the shape of the yield curve given in the following term structure? What expectations are…

A: Yield curve shows the relation between the interest rates of a bond with respect to the time period.

Q: tfolio P has a beta of 1.0.

A: The beta of the portfolio refers to the weighted sum of the assets of the company according to the…

Q: Evaluate the following project using PW method. The MARR is set to 12% per year Initial Investment -…

A: Given: Year Particulars Amount   MARR 12% 0 Initial investment -13000 1 to 15 Annual…

Q: What critical success factors should all investment films involved in stockbroking and asset…

A: Asset management involves the practice of collecting, maintaining, and trading investments with the…

Q: Q7-3. If interest is compounded more than once a year, will the effective interest rate be higher…

A: Let the nominal interest rate = r Compounding frequency = m

Q: The Gilbert Instrument Corporation is considering replacing the wood steamer it currently uses to…

A: Net present value is the difference between the present value of cash inflows and present value of…

Q: insurance is relevant to the public an

A: Insurance is an agreement between two parties in which the insurer should pay money against which…

Q: A 5-year project will require an investment of $100 million. This comprises of plant and machinery…

A: NPV is the difference between present value of cash inflows and initial investment NPV =PV of all…

Q: Dan is the sole owner of his closely held business and he is considering retiring within the next…

A: Amy will have a stepped-up basis in the property of $1,500,000.

Q: Assume you graduate from college with $30,000 in student loans. If your interest rate is fixed at…

A: The monthly payment amount can be calculated with the help of present value of annuity function

Q: uppose that certain operati xpenditures were expected to be t the end of the first months, $1000 at…

A: In arithmetic increasing annuity there is increase of fixed amount of increase at each period of…

Q: A corporation decides to deposit fixed payment per account earning 9% interest per year in order to…

A: Amount needed at the end of year 9 235000 Period  9 years No of period (Quarterly) 36 Rate of…

Q: Apply incremental B/C analysis at an interest rate of 8% per year to determine which alternative…

A: The relation between the cost of the project and the benefits from the project is known as…

Q: It is July 16. A company has a portfolio of stocks worth $100 million. The beta of the portfolio is…

A: Beta is included to consider the premium for risk. Higher beta reflects a higher level of risk.

Q: what is the basics of banking and discuss the various type of deposits

A: Basics of Banking A bank is known as a financial institution responsible for accepting deposits from…

Q: Given all else equal, if the yield to maturity of a Treasury bond decreases substantially, generally…

A: 1) YTM is Inversely related to Price of the bond i,e when YTM raises/falls, price of the bond…

Q: You are thinking about buying a stock and holding it for 3 years. You expect that the stock will pay…

A: The stock price which is the maximum price to be paid for share consists of dividends and terminal…

Q: Triangular Chemicals has total assets of $95 ​million, a return on equity of 37 ​percent, a net…

A: The sales can be calculated for by using the DuPont equation

Q: What is the current cost of bonds? Select one:

A: Bonds are defined as financial instruments used by companies to raise additional funds from the…

Q: Patrick makes payments of $250 per month at the end of each month. At the end of 10 years, he wants…

A: The rate of interest required to have the desired amount can be calculated with the help of rate…

Q: Considering the recent criminal conduct of Bernard Madoff in the world of finance,  indicating…

A: The recent criminal conduct of Bernard Madoff was based on a Ponzi scheme. Mr. Madoff defrauded…

Q: $3000 are invested in a bank account at an interest rate of 5 percent per year. Find the amount in…

A: As per the answering guidelines we are allowed to solve the first three parts of a question.  The…

Q: 8. Assuming a discount rate of 7%, what is the net present value of buying the new machine? A:…

A: Net present value (NPV) of an alternative/project refers to the variance between the initial…

Classification Of Risk

Risk means when there could be a possibility that the returns expected from a particular project or investment may or may not match the investor's expectations. In other words, the uncertainty of an income arising from a source that would either be lower than expected or result in losses in risk exposure of the project. The higher the risk involved, the higher is the return expected by the investor as the investor is exposed to a high level of risk. There are various methods by which different types of risk can be assessed and avoided or mitigated.