Ch 8 Questions (pg329) 1(a,b), 2/Problem 1 Questions 1 a)
Option Call Option Put Option Exercise Value Strike Price
the right to buy or sell an asset at a set price within a certain time is the right to buy a stock at a set price in a set amount of time t
Daily compounding method will be used for solving this problem.
For determining shares in the portfolio we need to find the difference between the price of stock if price
increases or decreases and range of the prices.
The price of option will be $5 ($26-
BRINKER FINANCIAL STATEMENT ANALYSIS
Year-end common stock price
Weighted average shares outstanding (in thousands)
After-tax cost of capital
Required principal and sinking fund payments
$30 (given in Question)
$25 (given in Question)
$7 (given in Question)
Exercise value of option
= Stock Price- Strike Price
Time Value Of Option
= Option Price-Exercise Value of Option
The NPV of machine is to be calculated for decision taking.
*Present value of
Cash outflows cash inflows