Ask Question, Ask an Expert


Ask Basic Finance Expert


Lucky Corporation is considering an investment in one of two mutually exclusive proposals:  Project A which involves an initial outlay of Rs 170,000 and Project B which has an outlay of Rs 150,000.  The Certainty Equivalent Approach is employed in evaluating risky investments.  The current yield on treasury bills is 0.05 and the company employs this as the riskless rate.  The expected values of net cash flows with their respective certainty equivalents are:


PV Factor @ 5%

Yr 1             0.952

Yr 2             0.907

Yr 3             0.864


problem1. Which Project should be acceptable to company?

problem2. Justify which Project is riskier?

problem3. If the company was to use risk adjusted discount rate technique, which Project should be analysed with higher rate?

problem4. Appraise the usefulness of Investment Appraisal methods when choosing between alternative investment projects.

problem5. Mention two sources of finance which can be employed for long-term business development.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M98155

Have any Question? 

Related Questions in Basic Finance

Utilize a graphic organizer or chart of your own in this

Utilize a graphic organizer or chart of your own in this discussion to compare and contrast "Felt Needs," Ascribed Needs," and "Future Needs". You can be creative in the selection of your diagram or chart. Post your diag ...

Part afor the following exercise complete the calculations

Part A For the following exercise, complete the calculations below. Evaluate different capital investment appraisal techniques by completing the calculations shown below: Bongo Ltd. is considering the selection of one of ...

Is there a relationship between x rate of poverty measured

Is there a relationship between (X) rate of poverty (measured as percent of population below poverty level) and (Y) rates of teen pregnancy (measured per 1,000 females aged 15 to 17)? A researcher selected random states ...

Using the loanable funds theory show in a graph how each of

Using the loanable funds theory, show in a graph how each of the following events affects the supply and demand for loans and the equilibrium real interest rate: a. A war leads the government to increase spending on the ...

Assignment 1 full disclosure in financial reporting-verizon

Assignment 1: Full Disclosure in Financial Reporting-Verizon Communications According to the textbook, the goal of financial reporting is to report financial information that is transparent and complete and truthfully re ...

Analyzing capital expendituresassume that you have received

Analyzing Capital Expenditures Assume that you have received a capital expenditure request for $52,000 for plant equipment and that you are required to do a justification analysis using capital budgeting techniques. The ...

In terms of maximizing the value of the firm discuss and

In terms of maximizing the value of the firm, discuss and explain what the key differences that an MNC must accomplishment compared to a domestic firm. In other words, what are the most important actions that an MNC must ...

Suppose a firm has several divisions each with a unique

Suppose a firm has several divisions, each with a unique area of business. What role does the firm-wide weighted average cost of capital play when determining a project's cost of capital in a given division?

Three marbles are selected from a base plate containing 5

Three marbles are selected from a base plate containing 5 red marbles and 3 green marbles. The number X, which represents the total of red marbles obtained in the selection, is noted. marbles are then placed back on the ...

Money and the prices in the long run and open

Money and the Prices in the Long Run and Open Economies Please no plagiarism. I have attached the paper from last week. The company was TORO. The organization's strategic plan you wrote about in Week 2 calls for an aggre ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate