Calculate the value of an real option value of an oil producing company which has the target of a takeover at $70 per share. It had present value of estimated reserves of 3038 million barrels of oil is $52millionand the estimated development cost of reserves$50 million. The average relinquishment lifeof the reserves is 12 years. The bond rate (i.e. risk free rate) at the time of the analysis was 9.00%. The variance in oil prices is 0.03.Apply BSOPM to value the company considering the nature as real option.

Example. The table reports book values for Corp X, incorporated in the US. The company has paid $300.000 for interest on debt in the FY, its current Market-to-Book Ratio is 1,5. The interest rate on the 10Y US Treasury Bond is 2%. The return on the S&P500 index is 12%, while, after estimating variance and covariance for Corp X and S&P, you find that the beta for Corp X is 1,1. The tax rate is 24%. What is Corp X's after-tax WACC? Corporation X (Book Values) $6MIn Debt $4MIn Equity Asset Value $10Mln

I have a problem with questions below. Impact on earnings of an option and an interest rate swap. Millikin Corporation decided to hedge two transactions. The first transaction is a forecasted transaction to buy 500 tons of inventory in 60 days. The company was concerned that selling prices might increase, and it acquired a 60-day option to buy inventory at a price of $1,200 per ton. Upon acquiring the option, the company paid a premium of $10 per ton when the spot price was $1,201. At the end of 30 days, the option had a value of $19 per ton and a current spot price of $1,214 per ton. Upon expiration of the option, the spot price was $1,216 per ton. In another transaction, the company borrowed $3,000,000 at a fixed rate of 8%; after three months, the company became concerned that variable rates would be lower than 8%. In response, the company entered into an interest rate swap whereby it paid variable rates to a counterparty in exchange for a fixed rate of 8%. The reset rate for the…

MHF believes the price of Amazon is going to fall substantially over the next 8 months. MHF uses an option (use the January 2024 contract with an exercise price of $95) to hedge the risk as it owns 10 million shares of Amazon. It will hedge exactly 50% of its position. Identify the type of option most likely used. Show the total position (please put this in a table) of the spot and derivative at expiration if the price of Amazon at expiration is a) $62; b) $77; c) $93; d) $112; e) $128.   Only typed answer

quiz 8- 10 and 11

There are only shares of A and B companies in the market. Currently, the market value of A and B shares is $200 million and $300 million, respectively. In addition, the risk-free interest rate (Rf) is 5 per cent. The probability and rate of return for the future state of the two entities are given as follows: (Value values with a decimal place or higher to the fifth decimal place.) 1) Obtain the expected return and variance of Entity A and B, respectively. 2) When forming a market portfolio with two shares, obtain the expected return rate and variance and standard deviation of the market portfolio. 3) Calculate the beta of share A, and calculate the required yield of share A. state probability Ra Rb 1 0.3 0.30 0.20 2 0.4 0.15 -0.10 3 0.3 0.05 0.10