Question
Requirement-A. A firm has an initial endowment of $74,944. The firm has identified three non-divisible feasible projects: Project-M requires $28,536 investment now to generate $32,116
Requirement-A. A firm has an initial endowment of $74,944. The firm has identified three non-divisible feasible projects: Project-M requires $28,536 investment now to generate $32,116 next year; Project-N requires $20,330 investment now to generate $30,476 next year; and Project-P requires $48,220 investment now to generate $62,724 next year. The firm invests in projects reasonably to maximise wealth. The average expected rate of return from the market is 17%. If Rob owns 44% shares of the firm, how much dividend would be expected by Rob in the next period based on the Two-Period Perfect Certainty model? <1 mark>
Requirement-B. A loan amount of $26,893 will be due after 7 years. Cob has a deposit plan to deposit $5,294 at the end of each year for the next 7 years. If the deposit generates 11% interest compounded monthly, find the deficit or surplus amount from this deposit plan to repay the total loan amount after 7 years. <1 mark>
Requirement-C. Bob will be starting a 3-year apprenticeship program in 22 months time. His mother, Liz, has promised him a living allowance of $215.7 per month to help support him during this time. If the interest rate is 9.3 percent per annum, compounding monthly, how much money will Liz need to set aside today to finance Bobs allowance? <1 mark>
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started