You have an arrangement with your broker to request 1050 shares of all available IPOs. Suppose that 9% of the time, the IPO is "very successful" and appreciates by 112% on the first day, 81% of the time it is "successful" and appreciates by 15%, and 10 % of the time it "fails" and falls by 17%.

a. By what amount does the average IPO appreciate the first day; that is, what is the average IPO underpricing?

b. Suppose you expect to receive 60 shares when the IPO is very successful, 250 shares when it is successful, and 1 comma 050 shares when it fails. Assume the average IPO price is $ 19. What is your expected one-day return on your IPO investments?

Your firm is considering leasing a $ 50000 copier. The copier has an estimated economic life of eight years. Suppose the appropriate discount rate is 8.8% APR with monthly compounding.

Classify each lease below as a capital lease or operating lease, and explain why:

a. A four-year fair market value lease with payments of $ 1150 per month.

b. A six-year fair market value lease with payments of $ 790 per month.

c. A five-year fair market value lease with payments of $ 920 per month.

d. A five-year fair market value lease with payments of $ 995 per month and an option to cancel after three years with a $ 9100 cancellation penalty.