Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

Laura Drake wishes to estimate the value of an asset expected to provide cash inflows of $3000 per year at the end of years 1 through 4 and $15000 at the end of year 5. Her research indicates that she must earn 10% on low risk assets, 15% on average risk assets, and 22% on high risk assets.

a. Determine what is the most Laura should pay for he asset if it is classified(1) low risk, (2) average risk, and (3) high risk

b. Suppose Laura is unable to assess the risk of the asset and wants gto be sertain sheis making a good deal. On the basis of your findings in part a, what is the most she should pay? Why?

c. All else being the same, what effect does increasing risk have on the value of an asset? describe in light of your findings in part a.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M939528

Have any Question? 


Related Questions in Basic Finance

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 ...

What is disintermediation when is it likely to occur what

What is disintermediation? When is it likely to occur? What factors can reduce it? If I take my funds out of my credit union and put them in a money market mutual fund, have I disintermediated? Why or why not?

Suppose a company raises funds by issuing short-term bonds

Suppose a company raises funds by issuing short-term bonds (commercial paper). It uses the funds to make private loans. Such a firm is called a finance company. Is a finance company a type of bank?

Explain how buying behavior of business customers in

Explain how buying behavior of business customers in different countries may have been a factor in speeding the spread of international marketing.

Lambda corporation has current liabilities of 430000 a

Lambda Corporation has current liabilities of $430,000, a quick ratio of 1.7, inventory turnover of 4.9, and a current ratio of 3.4. What is the cost of goods sold for Lambda Corporation?

The wc pruett corp has 300000 of interest-bearing debt

The W.C. Pruett Corp. has $300,000 of interest-bearing debt outstanding, and it pays an annual interest rate of 11%. In addition, it has $600,000 of common stock on its balance sheet. It finances with only debt and commo ...

Assignment2 pages apa style showing at least 3 source for

Assignment 2 Pages, APA style showing at least 3 source for the following: Suppose a U.S. wood-products company has facilities and employees in Canada providing its raw materials (wood), but has most of its sales in the ...

1 choose a country of interest to you go to the executive

1. Choose a country of interest to you. Go to the Executive Planet website (www.executiveplanet.com) or another website with cross-cultural comparisons and analyze the country in terms of the following cultural dimension ...

On a given day the number of square feet of office space

On a given day, the number of square feet of office space available for lease in a small city is a normally distributed random variable with a mean of 750,000 square feet and a standard deviation of 60,000 square feet. T ...

What is redlining how is the community reinvestment act

What is redlining? How is the Community Reinvestment Act supposed to affect it? What are the classifications for depository institutions and the ratings under the current regulations? Could my bank be violating the law i ...

  • 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