Great - 600(18) – 6000 = 4800 Figure 6.6 Equivalent Decision Tree 0.45 1074 Fair 0.35 - 300(18) – 6000 = -600 Awful 0.20 Market product - 90(18) – 6000 =-4380 -6000 1074 Abandon product

A loan of 200,000 is to be repaid with level monthly payments based on a 30 -year amort zation schedule. At the end of 7 years, The loan will be paid off with a balloon payment. The annual effective interest rate is 7%. Calculate the amount of the balloon payment. ◻ 181,677  181,950  182,979  183,593  183,625

Suppose the amount of steel was decreased by D units.What is the impact on the optimum objective value?How large can the increase in steel availability be sothat the shadow price remains as 228 4/7 (1,600/7)?Suppose that steel becomes available at $545 perthousand pounds. Should you purchase the steel?  Suppose that you could purchase a thousand pounds ofsteel for $205. Should you purchase the steel?

5. If money can be invested at 5% compounded annually, A. Accumulate P1,000 for 15 years. B. Discount the result of problem A for 10 years. C. Accumulate P1,000 for 5 years. Compare the results of B and C.

Please answer along with the excel formulas - 1. Sue now has $125. How much would she have after 8 years if she leaves it invested at 8.5% with annual compounding? $205.83 $216.67 $228.07 $240.08 $252.08 2. Suppose you have $1,500 and plan to purchase a 5-year certificate of deposit (CD) that pays 3.5% interest, compounded annually. How much will you have when the CD matures? $1,781.53 $1,870.61 $1,964.14 $2,062.34 $2,165.46 3. Last year Rocco Corporation's sales were $225 million. If sales grow at 6% per year, how large (in millions) will they be 5 years later? $271.74 $286.05 $301.10 $316.16 $331.96

Which of the following statements is correct for the Black-Scholes model?     A) The price of an American call written on a stock is: c = SN(d1)-Ke-rTN(d2)     B) The stock price at a future point in time follows a log-normal distribution.     C) The continuously compounded return on the stock follows a log-normal distribution.     D) Black-Scholes prices may allow for arbitrage opportunities. Please explain and justify your choice.

Find the present values of these ordinary annuities. Discounting occurs once a year. Do not round intermediate calculations. Round your answers to the nearest cent. $400 per year for 10 years at 4%. $   $200 per year for 5 years at 2%. $   $300 per year for 6 years at 0%. $   Rework previous parts assuming they are annuities due. Present value of $400 per year for 10 years at 4%: $   Present value of $200 per year for 5 years at 2%: $   Present value of $300 per year for 6 years at 0%: $

The Free Cash Flow model has the following advantage over the Dividend Growth model: In the case of variable growth, it does not require the calculation of any horizon value. It can be applied even if growth rates are unknown. It can be applied to companies with variable growth in the initial years that eventually settle down to a fixed rate of growth for the long term. It can be applied to divisions of companies. O It does not require any forecasting.

What is the relative tax advantage of corporate debt if the corporate tax rate is Tc=0.21 , the personal tax rate on interest is TpD=0.37 , but all equity income is received as capital gains and escapes tax entirely ( TpE=0 )? How does the relative tax advantage change if the company decides to pay out all equity income as cash dividends that are taxed at 20%? Note: Do not round intermediate calculations. Round your answers to 4 decimal places.

Suppose the equilibrium price for good quality used cars is $20,000. And the equilibrium price for poor quality used cars is $10,000. Assume a potential used car buyer has imperfect information as to the condition of any given used car. Assume this potential buyer believes the probability a given used car is good quality is .60 and the probability a given used car is low quality is .40. Assume the seller has perfect information on all cars in inventory. If the seller sells the buyer a good quality car, what is the net-benefit to the seller? a. A net gain of $4,000. b. A net gain of $20,000. c. A net loss of $4,000. d. A net loss of $10,000.