Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

1) Drake wishes to evaluate value of the asset expected to give cash inflows of= $3000 per year at the end of years 1 through 4 and $15000 at the ending of year five. Her research points out that she should earn 10% on low risk assets, 15% on average risk assets, and 22% on high risk assets.

a) Find out what is the most Drake must pay for the asset if it is classified(1) low risk, (2) average risk, and (3) high risk.

b) Assume Drake is unable to assess risk of asset and wants got be certain she is making a good deal. On basis of your findings in part a, what is the most she must pay? Describe why?

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

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M915166

Have any Question? 


Related Questions in Basic Finance

An exhaust stream leaving a semiconductor fabrication plant

An exhaust stream leaving a semiconductor fabrication plant contains 4 mol % volatile organic chemical, VOC, pollutant. Twenty-five cubic meters per minute enter the bottom of a packed absorption tower and flows counterc ...

A congresswoman introduces a bill to outlaw credit

A Congresswoman introduces a bill to outlaw credit rationing by banks. The bill would require that every applicant be granted a loan, no matter how high the risk that the applicant would not pay back the loan. She defend ...

1 the following data are for zero coupon treasury bonds

1. The following data are for zero coupon treasury bonds each with a face value of $1000. They are to be used for all parts of this question. Maturity   Price 1 Year 968 2 Year 940 3 year 921 a. What is the three year sp ...

What is the weekly risk free rate with continuous

What is the weekly risk free rate with continuous compounding (You do not need to calculate the number exactly...a close approximation will be sufficient). Risk Free Rate = 1.79% nominal rate with one compounding period ...

1 does rpm actually create a shortest path tree explain

1. Does RPM actually create a shortest path tree? Explain. What are the leaves of the tree? 2. List three steps that a DVMRP router uses to create a source-based tree. Which phase is responsible for creating the part of ...

A lsquolsquocooling bag commonly used for storing water in

A ‘‘cooling bag,'' commonly used for storing water in hot, arid environments is made of a thin porous fabric. A small amount of water diffuses through the fabric and evaporates from the surface of the bag. The rate of ev ...

Assume the sweatshirt test scores are normally distributed

Assume the sweatshirt test scores are normally distributed with a mean of 500 and a standard deviation of 100. (a) Consider all random samples of 100 test scores. What is the standard deviation of the sample means? (b) W ...

Company x has a 7 percent semiannual coupon bonds that

Company X has a 7 percent semiannual coupon bonds that sells for $976, has a face value of $1,000, and has a yield to maturity of 8.079 percent. How many years will it be until this bond matures?

The following is from a business report by the reuters news

The following is from a business report by the Reuters news agency: "Online retailer Overstock.com . . . posted a surprise quarterly profit and its shares jumped as much as 34 percent to their highest level in almost two ...

Frito-lay adapts to the chinese marketin the 1930s two men

FRITO-LAY ADAPTS TO THE CHINESE MARKET In the 1930s, two men in different parts of the United States began businesses that would eventually come to dominate the global snack food market. In 1932, Elmer Doolin, an ice cre ...

  • 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

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen