An investor wishes to invest P2,000,000. Venture A, requiring P2,000,000 will return 8%. Venture B, requiring P500,000 will return 15%. What retum on the remaining Pl,500,000 is required to equal the overall profitability of venture A?
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- What is the overall rate of return on a $100,000 investment that returns 20% on the first $30,000 and 14% on the remaining $70,000? Enter the letter that best corresponds to the correct answer. 0.15 8% 18.20 % 15.5 8% d 17% (average)John wants to invest $1 000 000. He has two options. The first option is to buy government bonds that earn 4% annually. The second option is to buy an apartment building that brings him $100 000 per year in revenues. Compare the two options in terms of their internal rates of return. (Your answer in the answer box should be either 1 or 2). Calculations should be provided.If you invest $5,095 in a long-term venture, you will receive $1,000 per year forever. Assuming your interest rate is 8% per year, what is the capitalized worth of your investment? Choose the closest answer below. OA. The capitalized worth of your investment is $7,836. OB. The capitalized worth of your investment is $7,405. OC. The capitalized worth of your investment is $4,169. OD. The capitalized worth of your investment is $7,789.
- Innis consulting groups investment manager funds for a number of companies and wealthy Clients. The investment strategy is tailored to each client’s needs .For a new clients, Innis has been authorized to invest up to $1.2 million in two investment funds :a stock funds and money market fund. Each unit of the stock fund costs $ 50 and provides an annual rate of return of $5 per dollar invested : :each units of the money market funds cost $100 and provides an annual rate of return $4 for each dollar invested . The clients wants to minimize risks subject to the requirements that the annual income from the investment be at least $60,000.Accoording to Innis’s risks measurements system .each units invested in the stock fund has a risks index of 8,and each units invested in the money market funds has a risks index of 3;the higher risks index associated with the stock funds simply indicated that it is the riskier investment . Inni’s client s also specified that at least $300,000 be…Consolidated Edison Power is evaluating the construction of a new electric generation facility. The two choices are a coal-burning plant (CB) and a gaseous diffusion (GD) plant. The CB plant will cost $160 per megawatt to construct, and the GD plant will cost $180 per megawatt. Owing to uncertainties concerning fuel availability and the impact of future regulations related to air and water quality, the useful life of each plant is unknown, but the following probability estimates have been made .a. Determine the expected life of each plant. b. Based on the ratio of construction cost per megawatt to expected life, which plant would you recommend that Con Ed build?Fethe's Funny Hats is considering selling trademarked, orange-haired curly wigs for University of Tennessee football games. The purchase cost for a 2-year franchise to sell the wigs is $20,000. If demand is good (40% probability), then the net cash flows will be $27,000 per year for 2 years. If demand is bad (60% probability), then the net cash flows will be $9,000 per year for 2 years. Fethe's cost of capital is 14%. A. What is the expected NPV of the project? B. Use decision-tree analysis to calculate the expected NPV of this project, including the option to continue for an additional 2 years. B. Use decision-tree analysis to calculate the expected NPV of this project, including the option to continue for an additional 2 years.
- Hudson Corporation is considering three options for managing its data warehouse: continuing with its own staff, hiring an outside vendor to do the managing, or using a combination of its own staff and an outside vendor. The cost of the operation depends on future demand. The annual cost of each option (in thousands of dollars) depends on demand as follows: a. If the demand probabilities are 0.2, 0.5, and 0.3, which decision alternative will minimize the expected cost of the data warehouse? What is the expected annual cost associated with that recommendation? b. Construct a risk profile for the optimal decision in part (a). What is the probability of the cost exceeding $700,000?An investment of 15,000,000 yields net annual revenues of 11,500,000. What is the simple payback period?Greta, an elderly investor, has a degree of risk aversion of A = 4 when applied to return on wealth over a one-year horizon. She is pondering two portfolios, the S&P 500 and a hedge fund, as well as a number of 4-year strategies. (AlIl rates are annual, continuously compounded.) The S&P 500 risk premium is estimated at 6% per year, with a SD of 18%. The hedge fund risk premium is estimated at 4% with a SD of 24%. The return on each of these portfolios in any year is uncorrelated with its return or the return of any other portfolio in any other year. The hedge fund management claims the correlation coefficient between the annual returns on the S&P 500 and the hedge fund in the same year is zero, but Greta believes this is far from certain. Compute the estimated 1-year risk premiums, SDs, and Sharpe ratios for the two portfolios. (Do not round your intermediate calculations. Round "Sharpe ratios" to 4 decimal places and other answers to 2 decimal places.) Hedge Fund Portfolio S&P…
- Allina opens an exotic bakery. Her capacity for the month is eight hundred (800) Love Cherry Short cakes. On average, in a month, she pays a fixed amount for water, electricity, security and a loan of TTD100.00, TTD1,200.00, TTD2,700.00 and TTD4,000.00 respectively. In addition, she estimates that TTD50.00 more must be paid for each Love Cherry Short cake she makes and sells. If she sells one Love Cherry Short cake for TTD90.00. Identify and clearly state all variables used. Determine the following: Allina’s total cost and revenue functions. From part a) state the domain and range the total cost and revenue functions. Allina’s total cost when she produces and sells one thousand Love Cherry Short cakes. The value of the rational function of total cost and total revenue when no Love Cherry Short cakes are made and sold. Answer the following based on the problem set above. a. write a short reflective piece (NO MORE THAN 50 words per Problem Set…A-Z Technologies, a manufacturer of amplified pressure transducers, is trying to decide between a dual-speed and a variable-speed machine. The engineers are not sure about the salvage value of the variable speed machine, so they have asked several different used-equipment dealers for estimates. The results can be summarized as follows: there is a 35% chance of getting $18,000, a 41% chance of getting $24,000, and a 13% chance of getting $29,000. Also, there is an 11% chance that the company may have to pay $5000 to dispose of the equipment. Calculate the expected salvage value.Two alternative investments are being considered. Design A has an initial cost of $3 million and annual cost of 135,000 dollars per year. Design B has an initial cost of $3.7 million and annual cost of 70,000 dollars per year. What is the rate of return of design B as compared to design A? Hint it is between 5% and 10%. MY Answer is 9.29 % is it correct?