You have just turned 26, and you intend to start saving for your retirement. You plan to retire in 43 years when you turn 68. During your retirement you would like to have an annual income of $120,000 per year for the next 27 years (until age 95). Calculate how much you would have to save...
A hedge fund charges an incentive fee of 20% of any investment returns above the T-bill rate, which currently is 2%. In the first year, the fund suffers a loss of 8%. What rate of return must it earn in the second year to be eligible for an incentive fee?
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A portfolio has 90 shares of Stock A that sell for $41 per share and 115 shares of Stock B that sell for $22 per share. Find the weight of stock A and the weight of stock B in percentage.
Fun Land is considering adding a miniature golf course to its facility. The course would cost $64000, would be depreciated on a straight line basis over its 4-year life, and would have a zero salvage value. The estimated income from the golfing fees would be $46500 a year with $17500 of that...
A company currently pays a divdend of $2 per share ,Do= $ 2. It is estimated that the company's dividend will grow at a rate of 20% per year for the next two years.Then 7% and remain constant thereafter. The company stock has a beta equal to 1.2, the risk free rate is 7.5% and the market...
Explain the concept of risk-free borrowing and lending.
If D0 = $1.75, g (which is constant) = 3.6%, and P0 = $32.00, what is the stock s expected total return for the coming year?
Explain why identifying and valuing the real options can help managers make better investment decisions.
Describe the importance of corporate governance.
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1. Can you help me with this valuation problem?: Imagine that you are trying to evaluate the economics of purchasing an automobile. You expect the car to provide annual after-tax cash benefits of $1,200 at the end of each year and assume that you can sell the car for after-tax proceeds of $5,000 at the end of the planned 5-year ownership period. All funds for purchasing the car will be drawn from your savings, which are currently earning 6% after taxes.
- a.Identify the cash flows, their timing, and the required return applicable to valuing the car.
- b.What is the maximum price you would be willing to pay to acquire the car? Explain.
2. How do you calculate the before tax-cost of the Sony bond and the after-tax cost of the Sony bond given the following information?:
- David Abbot is interested in purchasing a bond issued by Sony. He has obtained the following information on the security:
- Sony bond
- Par value $1,000 Coupon interest rate 6% Tax bracket 20%
- Cost $930 Years to maturity 10