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I nedd help for this before 1 0 H 3 0 in excel HELPPP DRUNKY DONALD CASE ( 1 / 2 ) Drunky Donald (
I nedd help for this before H in excel HELPPP
DRUNKY DONALD CASE
Drunky Donald DD is a wine connoisseur who wishes to acquire a bottle
of Screaming Eagle Cabernet Sauvignon that costs $ He does not
wish to drink it but just to temporally buy it in order to make a good deal,
knowing that one of his good friends, Wildy Vlad WV is desperate to buy
it from him DD wishes a $ selling price, ie with a profit
As a first option, he can get equity from friends who are ready to invest in
the deal with a dividend rate expectation
As an alternative, DD is willing to ask them to bring only $ equity
under similar financial conditions and take financial leverage of $
A yearly interest of $ is placed on the loan
Donald and Vlad do the deal in a taxfree country
DRUNKY DONALD CASE
Please answer the following questions
What is the expected gain in $ in the No leverage' option, with a
increase in the bottle value?
In the leverage option, what is the expected gain in $ with the same
increase in the bottle value?
DD has acquired the bottle, with the leverage option.
After some time, WV tells him is willing to accept to acquire his bottle, but
at a price a bit less than the expected Still, DD wants to get out of the
deal at least the gain calculated in the No leverage' option in question
What is the price of the bottle DD is ready to accept in order to get at
least this minimum gain out of this deal?
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