FINC 322 - Homework #2

FINC 322 - Homework #2 - FINC322...

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Unformatted text preview: FINC322 FinancialManagement1 Homework#2(NPVandIRR)  Showallyourwork. ThisisdueDecember8th2011inclass(Thursday) YoucandothishomeworkalonebutIstronglyrecommendthatyouformateamofupto4 students;butnomorethan4studentsineachteam.Whenyousubmitthishomework,one teamsubmitsjustonecopywithallteammembernamesontop(Writelegiblyplease). . Thishomeworkcontributes35points(50%ofyourtotalhomeworkpoints;theother50%from homework#1)toyourcoursetotalpoints(740point syllabus Homeworkwillnotbereturnedtoyouaftergradingbutyoucancometomyofficetogoover yourhomeworkforanygradingconcern.      Anexampleoffindinganexpectedvaluewhenyouhavechanceoutcomes:    PossibleState(i) Probabilityi Outcomei Good(1) 0.4 $20 Bad(2) 0.6 $10  Expectedstockpricecanbecalculatedbythefollowingequation:  Expectedvalue:   Expectedprice=0.4X20+.6X10=8+6=$14       FINC322 FinancialManagement1  FINC322 FinancialManagement1  FINC322 FinancialManagement1  ...
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FINC 322 - Homework #2 - FINC322...

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