CHE374F Midterm 2009F Soln - Analysis CHE374 Engineering...

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Name: CHE374 - Engineering Economic Analysis Midterm Test, November 1'l, 2009 . SDL0-itot49 Student Number: G8404 / G8405 Ouestion Number Marks I l0 2 10 3 4 Total 40 Aaswer all questions. Aids allowed: Calculator, textbook, single aid sheet. Page 1 of5
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Question #1 The company you are working for is debating which prcject(s) they should invest in. To simplify the analysis, the company has assumed that over the rext period of time, only two maxket states will exist. Durhg tlat period of time, the risk-free rate is 4%. The following table summanzes the data: Market Proiect 1 Proiect 2 Proiect 3 Price/Cost 40 30 Expecled Price if Market Goes Ut 50 100 3B Expected Price Market Goes Down 24 The probability ofthe market going up is 55olo. What is the expected return of each project? What is the beta for each project? (10 ma*s) ?Li a 50 + bto+: +o a35 | bto4 '74 ^;tr|tbto+=1a0 c( 961 b lo4 = 3t P'-1q *4fi-ixtO7 t'7 c,85 't lA I t.:-- ) - t6 IL tt =/ P, ?1: ,> t1€ h=4, b._,.,i 2 l>t2 | /- ,^, l-L = 1x'ru -=7 xlat t2b / t t/' ULt lJ ?3 ^Eo aq5 tal tD'1; f./ , A/1 o 2, w Z[-O r ':L'x I u- Y ,. '.-- qL -a 1l = I )'21 {- b t0+ , l, lg+ 2Q L c1.-"r' eYFe L-(6D r( n1 - clK,t- RE rU 2 t'-l ,' 40x0,5f +L+(t-0") -t 1,90 7u Z ot,6f too>0.q, + 9r(t-
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This note was uploaded on 10/18/2010 for the course ENGINEEIRI CHE374 taught by Professor Y.lawrynshyn during the Fall '09 term at University of Toronto.

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CHE374F Midterm 2009F Soln - Analysis CHE374 Engineering...

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