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HallHomework5 - regular payback than with discounted...

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FI360: Week 5 Homework Randall Hall Problem 8-2 a. The payback period for this bond is 25 years. b. This bond doesn’t seem like a very good investment, given the payback period. In my opinion, the only way it would really be a good investment is if the risk level is very low. c. The discounted payback period would be 30 years. The principle illustrated by this example is that investments with long payback periods are better with
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Unformatted text preview: regular payback than with discounted payback. Problem 8-9 Project A: IRR = 17.4 Project B: IRR = 8.7 Project C: IRR = 27.2 Project D: IRR = 21.4 Problem 10-1a a. 6 + (1.6 x (11 - 6)) = 14. Therefore, INTC’s cost of equity is 14%. Problem 10-3 Coca-Cola ((6.31 - 6.09) / 6.09) / ((24.09 - 23.10) / 23.10) = 0.84 PepsiCo ((6.44 - 5.92) / 5.92) / ((35.14 - 32.56) / 32.56) = 1.11 PepsiCo had higher operating leverage....
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