A project has a 70% chance of producing a 10% return and a 30% chance of generating -4% returns. What is the expected return on this investment project? A. 7% B. 5.8% C. 3% D. 5.5% E. -4.0%
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- What is the approximate expected coefficient of variation (=CV) of returns for a projected one-year project that is 50%-50% probabilities to give +15% return as it is to provide a 5% loss (-5%)? (Please Show Work) A) 0 B) 25 C) 5 D) 2 E) 3A project has an expected net present value of $50,000 with a standard deviation of the net present value of $20,000. Assume that NPV is normally distributed. What is the probability that the project will have a negative NPV? a.34.5% b.0.62% C.49.38% d.99.38%Wallace Company is considering two projects. Their required rate of return is 10%. Which of the two projects, A or B, is better in terms of internal rate of return?
- Giorgio Co. is looking at an investment project with an internal rate of return of 10.8%. The initial outlay for the investment is $90,000. The hurdle rate or minimum acceptable rate of return is 10.2%.rive What is the expected return of the following investment? Actual Return Probability 35% 10% 40% 15% -8% 5% 15% 30% 5.3% 8.2% 18.3% 22.6%A project has an assigned beta of 1.24, the risk-free rate is 3.8%, and the market rate of return is 9.2%. What is the project's expected rate of return? A. 15.21% B. 11.41% C. 10.50% D. 14.61%
- Five alternatives are being evaluated by the incremental rate of return method. Incremental Rate of Return, % Initial Alternative Investment, $ versus DN, % A Overall ROR B CDE A 9.6 27.3 9.4 35.3 25.0 -25,000 -35,000 -40,000 -60,000 38.5 24.4 46.5 27.3 B. 15.1 - C 13.4 - D 25.4 6.8 - 75,000 20.2 (SO2PI1) If the projects above are mutually exclusive and the MARR is 20% per year, the best alternative is Select one: O a B ObC OcD OdEYour investment has a 20% chance of earning a 30% rate of return, a 50% chance of earning a 10% rate of return and a 30% chance of losing 6%. What is your expected return on this investment?A. 12.8%B. 11.0%C. 8.9%D. 9.2%30- If an investment is producing an internal rate of return that is equal to therequired return, the Net Present Value of the project will be ____ and theProfitability Index of the project will be ______. a. Negative; Greater than oneb. Negative; Onec. Zero; Oned. Positive; Onee. Positive; Greater than onef. Zero; Less than one
- What is the net present value of an investment that requires a 10 percent minimum rate of return and has the following projected cash flows: Yr0 = -100, Yr1 = 25, Yr2 = 35, Yr3 = 45, Yr4 = 35, and Yr5 = 30? a. 41 b. 28 c. 34 d. 35You are considering investing in a project with the following possible outcomes: Probability of Investment States Occurrence Returns State 1: Economic boom 18% 20% State 2: Economic growth 42% 16% State 3: Economic decline 30% 3% State 4: Depression 10% -25% Calculate the expected rate of return and standard deviation of returns for this investment, respectively. O 7.35%, 12.99% O2.18%, 1.69% O 8.72%, 12.99% O3.50%, 1.69%c. If the required return is 10 percent, what is the NPV for Project A? NPV d. If the required return is 10 percent, what is the NPV for Project B? NPV