Question
1. Expected Values of Returns for Assets A & B Possible Outcomes Probability(1) Returns (2) Asset A Pessimistic .25 13% Most Likely .5 15 Optimistic
1.
Expected Values of Returns for Assets A & B
Possible Outcomes
Probability(1)
Returns (2)
Asset A
Pessimistic
.25
13%
Most Likely
.5
15
Optimistic
.25
17
Total
1
Asset B
Possible Outcomes
Pessimistic
.25
7%
Most Likely
.5
15
Optimistic
.25
23
Total
1
The expected values of returns for Norman Companys assets A and B are given above along with the probability, please calculate the standard deviation and Coefficient of Variation.
In the constant growth valuation , we found Duchess Corporations cost of common stock equity Ks to be 13%, using the following value : an expected dividend D1 of $4; a current market price , P0, of $50and an expected growth rate of dividends , g of 5%. Calculate the cost of new common stock. (Duchess Corporation has estimated that on the average, new shares can be sold for $47. THE 43 per share underpricing is due to the competitive nature of the market. A second cost associated with a new issue is floating costs of $2.50 per share that would be paid to issue and sell the new shares.
Calculate the PP, NPV of the following and please explain your decision:
Relevant cash flows
Project a
Project b
Initial Investment
$50,000
$50,000
Year
Operating cash flow
Operating cash flow
1
$5000
$40,000
2
5000
2,000
3
40,000
8,000
4
10,000
10,000
5
10,000
10,000
Calculate and explain the DOL, DFL, DTL
Sales (in units)
20,000
30,000
Sales Revenue
100,000
150,000
Variable operating cost
40,000
60,000
Fixed operating cost
10.000
10,000
EBIT
50,000
80,000
Interest
20,000
20,000
Net Profits before taxes
30,000
60,000
Tax(40%)
12,000
24,000
Net Profit after taxes
18,000
36,000
PS dividends
12,000
12,000
Earnings available to CS Holder
6000
24,000
EPS
1.2
4.8
Sales revenue =$5/unit x sales in units
Variable operating costs=$2/unit x sales in units
Assuming that the Mills company bond pays interest semiannually and that the required stated annual return Kd, is 12% for the similar risk bonds that also pay semiannual interest, What is the value of the bond.
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The Oxford Handbook Of Sovereign Wealth Funds
Authors: Douglas J. Cumming, Geoffrey Wood, Igor Filatotchev, Juliane Reinecke
1st Edition
0198754809, 978-0198754800
