1. A generous university benefactor has agreed to donate a large amount of money for student scholarships. The money can be provided in one lump-sum of $10mln, or in parts, where $5.5mln can be provided in year 1, and another $5.5mln can be provided in year 2.
a) Assuming the opportunity interest rate is 6%, what is the present value of the second alternative?
According to Douglas, "a dollar received in the present period is worth more than a dollar received in a future period" (2010, ch. 1.4). The reasoning behind this is that an amount received today can be deposited into a bank and earn interest. Therefore an amount received in a year, for example, is valued less today, and conversely, an amount received today is valued to be more
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a) Apply the coefficient-of-variation decision criterion to these alternatives to find out which is preferred by the angel investor, assuming that he/she is risk-averse.
The text defines the coefficient-of-variation decision criterion as "a statistic of a probability distribution and is calculated as the ratio of the standard deviation to the mean” (2012, ch. 2.2). In this case, the CV of Business 1 is 40,000/100,000 = 0.4 and for Business 2 the CV is 25,000/60,000 = 0.4. The CV criterion is does not take into consideration the different levels of risk that individual investors may have making it an unsuitable decision making platform when the measure of individual risk preferences is necessary. The coefficient-of-variation decision criterion would be an inferior decision-making model in this case because it does not definitively distinguish which of the two businesses is best to invest in and does not address an individual investors risk preference.
b) Apply the maximin criterion, assuming that the worst outcome in Business 1 is to lose $5,000, whereas the worst outcome in Business 2 is to make only $5,000 in profit.
The maximin decision rule, is a basic comparison of two minimum outcomes (Douglas, 2012). Under this rule the highest or best out of the worst outcomes would be the right choice. In light of this fact, Business 2 would be chosen under this rule. Making $5,000 in profit is a better
In proposing eBay as publicly traded on an open market organization in recognizing prospect livelihood, complete model is great and fits development without the requirement for progressing costly base or staffing costs. Gained account recognizes substance which unites suppliers and clients. Figures out how to maintain a set-up where request and supply shows value determination.
a) In the first set of calculations, the staff used a discount rate of 20%, a five-year time horizon, and ignored taxes and terminal value. What is the relative attractiveness of these three alternatives?
Tobacco smoking is the largest preventable cause of death and diseases in the United States of America. Close to 480,000 Americans lose their life each year due to illness caused by smoking cigarette. (Healthy People 2020, 2010).
Developing effective retail management is utilizing the space in the store in order to display items that provide the largest contribution to overall profit. Retailers attempt to draw maximum attention to their most profitable products
1) Determining the best payoff for each alternative and choosing the alternative with the "best of the best" is the approach called:
9. MANAGEMENT SYSTEMS. The primary management systems that will be used in the company will be training, leadership and commitment which will equal our success. A better illustration can be seen above. The organization will have workshops that will provide clients with employee relations, law information and education that will help support an effective and efficient workforce.
This paper was developed under the scenario of choosing the name of a publicly traded company for that would be interesting for an employee to work and then analyzing and explaining the company, its compensation strategy, best practices the company is applying, and compensation-related challenges the company is facing. The paper will also analyze how the company applies compensation practice to determine the positive or negative impact to the company and its stakeholders; and the ways in which laws, labor unions, and market factors impact the company’s compensation practices. The company chosen was Chic-fil-a.
The Nelson’s wine store was operating a loss. They began their business with a $7,000 personal savings investment and a $15,000 which they had not been able to begin repayment during their nine months of operations. After the performance of a financial analysis, it was concluded that the Nelsons were losing on average $802 per month with estimated average monthly sales of $1,888 and estimated average monthly expenses of $1,580. At these levels, not only could the Nelsons not make a profit, they could not breakeven. In order to breakeven, the Nelsons would need to generate sales of $5,642 offering no salary to Bruce or $9,214 offering a salary to Bruce.
To answer this question we must define what a concept and construct is, “an image or idea specifically invented for a given research and/or theory-building purpose” (Cooper and Schindler, 2011). A
Knowing all the different aspects that make up these decisions are important for a business owner to be aware of. There are a lot of things to know and consider when comparing
there is a 40% probability that 70 units will be sold and a 60% probability that
2. Compute the NPV of both projects. Which would you recommend? What if they are not mutually exclusive?
Assumption: George orders 7,500 T-shirts; cost = $25,250; the number of attendees buy his T-shirts are 5%, 10% and 15% respectively
Slattery Company sells three products: A, B and C. Product A 's unit contribution margin is higher than Product B 's and Product B 's is higher than Products C 's. Which one of the following events is most likely to increase the company 's overall break-even point?
#1. Allocation of funds according to the type of investment we plan which will total to $25K