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Please compete the following questions in 2 hours and return. Please dont pick this assignment up, if you cant meet the deadline, as I will
Please compete the following questions in 2 hours and return. Please dont pick this assignment up, if you cant meet the deadline, as I will not be able to extend the time.
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I have answered most of the questions just a little unsure with my answers please respond within 2 hours. Thank you. Question 2 (4.5 points) The current price of a stock is $22. In one year, the price will be either $27 or $17. The annual risk-free rate is 6 percent. What is the price of a call option on the stock that has an exercise price of $22 and that expires in one year, rounded to the nearest dollar? Question 2 options: $1.00 $2.00 $3.00 $4.00 $5.00 Save Question 3 (4.5 points) An option which gives the holder the right to sell a stock at a specified price at some time in the future is called a(n) Question 3 options: Call option. Put option. Out-of-the-money option. Naked option. Covered option. Save Question 4 (4.5 points) Mills Mining is considering an expansion project. The proposed project has the following features. The project has an initial cost of $664--this is also the amount which can be depreciated using the following depreciation schedule: Year 1 is 33%, Year 2 is 45%, Year 3 is 15%, and Year 4 is 7%. If the project is undertaken, at t = 0 the company will need to increase its inventories by $97, and its accounts payable will rise by $69. This net operating working capital will be recovered at the end of the projects life (t = 4). If the project is undertaken, the company will realize an additional $666 in sales over each of the next four years (t = 1, 2, 3, 4). The company's operating cost (not including depreciation) will equal $248 a year. The company's tax rate is 40 percent. At t = 4, the projects economic life is complete, but it will have a salvage value of $102. The projects WACC = 10 percent. What are the one-time cash flows associated with ending the project (i.eStep by Step Solution
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