A company is considering two potential projects.   Project Alpha requires an investment of 1,000,000 and will return 185,464.74 per year at the end of each of the next six years.  It has an IRR of α%. Project Beta requires and investment of 860,725 and will return 300,000 at the end of year one and 600,000 at the end of year two.  It has an IRR of β%. Calculate α-β.

Q: A 10-year mortgage has the following characteristics: $500,000 principle 6% interest rate 10 years…

A: All the characteristics of a mortgage are known. The duration of the mortgage is to be determined.…

Q: Suppose your VISA card calculates interest using the average daily balance method, and the monthly…

A: A credit card refers to an instrument that is used for providing credit facilities to customers…

Q: Suppose a company currently pays an annual dividend of $3.00 on its common stock in a single annual…

A: The current share price is the effect on the price of the stock after the dividend is declared. The…

Q: You can afford a $1100 per month mortgage payment. You've found a 30 year loan at 7% interest. a)…

A: A mortgage is a loan used to purchase a property or real estate. The property serves as collateral…

Q: A stock has an initial value of $7, and can go up by 1.2 or down by 0.7, the risk free rate is 0.13%…

A: Initial Value is $7 UP move is 1.2 Down move is of 0.7 Total periods 3 Exercise price is 0.13% Risk…

Q: ABC invests $10,000 in XYZ mutual fund. XYZ mutual fund imposes total operating expense of 1.7% per…

A: Mutual fund refers to the type of investment in which money is to be pooled from many investors…

Q: The Penn Central Railroad has not paid local taxes since 1969, under federal bankruptcy court…

A: Net present value defines the discounted value of the investment in its whole life period. It is…

Q: A debt pf $47,000 is repaid by payments of $4,333 made at the end of every six months. Interest is…

A: A loan agreement is a critical document that outlines the terms and conditions of a loan, protecting…

Q: An investor requires a 3% increase in purchasing power in order to induce her to lend. She expects…

A: The nominal rate refers to the rate of interest that is charged before considering the inflation,…

Q: Find the present value of the following deferred annuity due. Periodic Made Payment Payment At:…

A: As per the given information: Periodic payment - $800Payment period - 3 monthsPeriod of deferment -…

Q: thank you for the prompt response to my question. Where did you calculate the 0.79 from in this…

A: The previous answer assumes that the column titled " Market Risk premium (Rm - Rf): Global Market"…

Q: An investor is trying to decide between a muni paying 5.75% or an equivalent taxable corporate…

A: Municipal bond yield = 5.75%  Corporate bond yield = 8.25%    The formula to be used is…

Q: ou are committed to buying a $225,000 backhoe for your new construction business. If you believe…

A: future value = fv = $225,000 Rate of return = r = 12% Time = t = 9 years

Q: You have been asked to forecast the additional funds needed (AFN) for Houston, Hargrove, &…

A: Additional funds needed defines the plan for the expansion of the business operations by increasing…

Q: Table below is the actual history of Apple Inc. (AAPL) stock split over the years  1. If you owned…

A: A stock split is a corporate action in which a company divides its existing shares into multiple…

Q: You can afford a $350 per month car payment. You've found a 5 year loan at 6% interest. How big of a…

A: A loan is a financial arrangement in which one or more people, companies, or other entities lend…

Q: s in South African Ra d presently trades a proximately US$17,5

A: a. To calculate the future US dollar cost of Xu's 30-day vacation in one year, we need to account…

Q: how can washington Mutual manage their interst rate risk

A: Washington Mutual, a former U.S. bank, faced serious challenges in managing interest rate risk due…

Q: Triad is considering to pay library annual costs $4300 indefinitely. What is the maximum amount of…

A: Perpetuity is a type of financial instrument that provides a stream of cash flows that lasts…

Q: You have the opportunity to purchase a perpetuity which pays $5,000 annually forever. If you require…

A: A perpetuity is a stream of fixed periodic cash flows ( annuity) of infinite duration

Q: The price of a home is $180,000. The bank requires a 15% down payment. The buyer is offered two…

A: Monthly payment refers to the periodic payment made at every month including the amount of fixed…

Q: A 180 day $3 million CD has a 4.25% annual rate quote. If you buy the CD, how much will you collect…

A: Maturity = 180 days Annual rate = 4.25%  Principal = $3,000,000

Q: how does interest rate risk relates to the washinton Mutual Case

A: Interest rate risk is the risk of an investment's value changing due to changes in interest rates.…

Q: 17 Richard has just received his first paycheque. He notices a deduction for Canada Pension Plan…

A: Canada Pension Plan is a contributory, earnings-related social insurance program managed by the…

Q: The following question illustrates the APT. Imagine that there are only two pervasive macroeconomic…

A: According to APT, a number of macroeconomic variables that influence the asset's overall risk…

Q: You heard about a company that is producing a product that you really believe in.  You think you can…

A: Next year stock price = p = $82.7 Rate of Return = r = 11.2%

Q: The following table shows the average life expectancies in several countries. Assume that all…

A: Life insurance is a type of insurance that provides the beneficiaries with an insured amount in the…

Q: An obligation can be settled by making a payment of $10,000 now and a final payment of $3,500 in…

A: The present value refers to the current worth of a future value. It is calculated to ascertain the…

Q: A homeowner can obtain a $250,000, 30-year fixed-rate mortgage at a rate of 6.0% with zero points or…

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Q: Your birthday is next week and instead of other presents, your parents promised to give you $1,300…

A: Compound interest formula used for Calculation of Future Value: FV= PV(1+r/n)^nt Present Value= PV=…

Q: Create an amortization table for a 15-yr fully amortizing, 6% loan for $10 million. Assume annual…

A: Amortization of loans is an important application of the time value of money. It helps to know the…

Q: You invest $200 per month at the beginning of every month for 40 years at 8% interest. What is the…

A: The FV of an investment refers to the total value of all the cash flows at a predetermined future…

Q: jeanette takes out a 50 year loan of 30000. instead of making level payments jeanette's annual…

A: When we take a loan we make periodic payments against that loan. In this case the periodic payments…

Q: You estimate a college education will be $300,000 when your child enters college in 18 years. You…

A: The question is based on the calculation of required rate of return in future value of money…

Q: Your financial planner offers you two different investment plans. Plan 1 is a R3958 annual…

A: Present value of annuity is the current value of the future payments that are calculated using the…

Q: If a product sells P^(7500) and costs P^(4300) to manufacture, its gross margin is P^(3200). Find…

A: Selling price = 7500 cost = 4300 Gross margin = 3200

Q: A $2 million jumbo CD is paying a quoted 3.55% interest rate on 180-day maturity CDs. How much money…

A: A Certificate of Deposit (CD) is a type of financial instrument that enables people to deposit money…

Q: If returns of S&P 500 stocks are normally distributed, what range of returns would you expect to see…

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Q: Grumpy Publishing is considering the purchase of a used printing press costing $84,200. The printing…

A: Internal Rate of Return is also known is IRR. It is a capital budgeting techniques which help in…

Q: .5

A: that discount the coupon value and a call price of the bond, combined added gives the market price…

Q: The accumulated value at the end of 13 years of an annuity-immediate that pays X per month for 13…

A: Compound = monthly = 12  Time = t = 13 * 12 = 156 months Future value = fv = $16,990.10 nominal…

Q: Determine the necessary working capital using the maximum deficit method, for project "X" with the…

A: Working capital, commonly called net working capital (NWC), is the difference between a company's…

Q: Determine

A: To determine the outstanding principal of the mortgage, we need to calculate how much of the…

Q: 4.22. A 5-year bond with a yield of 7% (continuously compounded) pays an 8% coupon at the end of…

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Q: Project L requires an initial outlay at t = 0 of $52,799, its expected cash inflows are $9,000 per…

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Q: Alpha Corporation has issued a bond to help finance its new stadium. This bond’s coupon rate is 6.7%…

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Q: Bond Value Coupon rate Interest Due Maturity Require Rate of Return Offered Price 10,000 8%…

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Q: Data for Dana Industries is shown below. Now Dana acquires some risky assets that cause its beta to…

A: Initial beta = 1 Initial required return  = 10.20% The market risk premium, RPM = 6.00% Percentage…

Q: ( a ).   An investor who is in the 28 % tax bracket is considering choosing between an investment…

A: As per our guidelines we are supposed to answer only one question (if there are multiple questions…

Q: A company purchased inventory as follows: 150 units at $5 350 units at $4 The average unit cost for…

A: Here, Purchase Price of 150 units is $5 Purchase Price of 350 units is $4

Risk Management Techniques

Risk management is the procedure of recognizing, analyzing, monitoring, and preventing the risks and threatening factors of investments and business. Risks can arise from various factors including internal controls, market changes, natural disasters, and failure in productions. Risk management techniques enable entities to control and minimize the risks as well as the threatening factors of the business and it also helps to improve the business.