A plan sponsor is considering two U.K. investment managers, Birmingham Asset Management and Figleaf Equities, for the same mandate. Birmingham will produce on average an annual value-added return of 1.7 percent over the benchmark, with variability of the excess returns of 2.20 percent. Figleaf is expected to produce a higher annual value-added return of 4,1 percent, but with variability of excess returns around 11 percent. Calculate the information ratio for each and explain which manager offers the best record of performance
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A plan sponsor is considering two U.K. investment managers, Birmingham Asset Management and Figleaf Equities, for the same mandate. Birmingham will produce on average an annual value-added return of 1.7 percent over the benchmark, with variability of the excess returns of 2.20 percent. Figleaf is expected to produce a higher annual value-added return of 4,1 percent, but with variability of excess returns around 11 percent.
Calculate the information ratio for each and explain which manager offers the best record of performance.
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- Huang Industries is considering a proposed project whose estimatedNPV is $12 million. This estimate assumes that economic conditions will be “average.”However, the CFO realizes that conditions could be better or worse, so she performed ascenario analysis and obtained these results: Calculate the project’s expected NPV, standard deviation, and coefficient of variation.Your boss wants you to conduct a sensitivity and scenario analysis to determine whether the following project is a winner. You are entering an established market, and you know the market size will be 1,100,000 units. You are unsure of your exact market share, the price you will be able to charge, and your variable cost per unit, but have determined a range of possible values for each (in the table below). Your initial investment cost is $150 million, and that investment will depreciate in straight-line form over the 20-year life of the project. There are no new NWC requirements, and there will be no salvage value at the end of the 20 years. The tax rate is 35%. The discount rate is 18%. a) Use the following table to conduct a full sensitivity analysis for the project. Make sure to include the NPV for the expected outcome as part of the full sensitivity analysis. Also add the best- and worst-case scenarios to the full sensitivity analysis. Show all of your work (written out, not an…Huang Industries is considering a proposed project whose estimated NPV is $12 million. This estimate assumes that economic conditions will be "average." However, the CFO realizes that conditions could be better or worse, so she performed a scenario analysis and obtained these results: Economic Scenario Probability of Outcome NPV Recession 0.05 ($72 million) Below average 0.20 (12 million) Average 0.50 12 million Above average 0.20 18 million Boom 0.05 38 million Calculate the project's expected NPV, standard deviation, and coefficient of variation. Enter your answers for the project's expected NPV and standard deviation in millions. For example, an answer of $13,000,000 should be entered as 13. Do not round intermediate calculations. Round your answers to two decimal places. is there a way to do the standard deviation in excel? i am having trouble with the formula
- A company estimates that its average-risk projects have a WACC of 10%, its below-average risk projects have a WACC of 8%, and its above-average risk projects have a WACC of 12%. Which of the following projects (A, B, and C) should the company accept? A) Project C, which is of above-average risk and has a return of 11%. B) All of the projects should be accepted. C)Project A, which is of average risk and has a return of 9%. D)None of the projects should be accepted. E)Project B, which is of below-average risk and has a return of 8.5%.Huang Industries is considering a proposed project whose estimated NPV is $12 million. This estimate assumes that economic conditions will be "average." However, the CFO realizes that conditions could be better or worse, so she performed a scenario analysis and obtained these results: Economic Scenario Probability of Outcome NPV Recession 0.05 ($34 million) Below average 0.20 (16 million) Average 0.50 12 million Above average 0.20 16 million Boom 0.05 28 million Calculate the project's expected NPV, standard deviation, and coefficient of variation. Enter your answers for the project's expected NPV and standard deviation in millions. For example, an answer of $13,000,000 should be entered as 13. Do not round intermediate calculations. Round your answers to two decimal places. E(NPV): million σNPV: million CV:As a financial analyst, you are tasked with evaluating a capital-budgeting project. You were instructed to use the IRR method, and you need to determine an appropriate hurdle rate. The risk-free rate is 4%, and the expected market rate of return is 11%. Your company has a beta of 0.75, and the project that you are evaluating is considered to have risk equal to the average project that the company has accepted in the past. According to CAPM, the appropriate hurdle rate would be A. 15%. B. 9.25%. C. 4%. D. 11%. E. 0.75%
- Jonson, Inc. is planning its operations for the coming year, and the CEO wants you to forecast the firm's additional funds needed (AFN). Data for use in the forecast are shown below. However, the CEO is concerned about the impact of a change in the retention ratio from 90% that was used in the past to 50%, which the firm's investment bankers have recommended. Seventy-five percent of the total assets are considered variable. Based on the AFN equation, by how much would the AFN for the coming year change if Jonson, Inc. decreased the retention from 90% to the new level? All pesos are in millions. Last year’s sales P300.0 Last year’s accounts payable P40.0 Sales growth rate 15% Last year’s notes payable P10.0 Last year’s total assets P500.0 Last year’s accruals P20.0 Last year’s profit margin 15.0% Initial retention…Jonson, Inc. is planning its operations for the coming year, and the CEO wants you to forecast the firm's additional funds needed (AFN). Data for use in the forecast are shown below. However, the CEO is concerned about the impact of a change in the retention ratio from 90% that was used in the past to 50%, which the firm's investment bankers have recommended. Seventy-five percent of the total assets are considered variable. Based on the AFN equation, by how much would the AFN for the coming year change if Jonson, Inc. decreased the retention from 90% to the new level? All pesos are in millions. Last year’s sales P300.0 Last year’s accounts payable P40.0 Sales growth rate 15% Last year’s notes payable P10.0 Last year’s total assets P500.0 Last year’s accruals P20.0 Last year’s profit margin 15.0% Initial retention…Jonson, Inc. is planning its operations for the coming year, and the CEO wants you to forecast the firm's additional funds needed (AFN). Data for use in the forecast are shown below. However, the CEO is concerned about the impact of a change in the retention ratio from 90% that was used in the past to 50%, which the firm's investment bankers have recommended. Seventy-five percent of the total assets are considered variable. Based on the AFN equation, by how much would the AFN for the coming year change if Jonson, Inc. decreased the retention from 90% to the new level? All pesos are in millions. Last year's sales P300.0 Last year's accounts payable P40.0 Sales growth rate 15% Last year's notes payable P10.0 Last year's total assets P500.0 Last year's accruals P20.0 Last year's profit margin 15.0% Initial retention ratio 90.0% P33.6M P20.7M -P33.6M P21.4M -P20.7M Refer to the case of Jonson Inc., What would the comoany's capital intensity ratio be if…
- Jonson, Inc. is planning its operations for the coming year, and the CEO wants you to forecast the firm's additional funds needed (AFN). Data for use in the forecast are shown below. However, the CEO is concerned about the impact of a change in the retention ratio from 90% that was used in the past to 50%, which the firm's investment bankers have recommended. Seventy-five percent of the total assets are considered variable. Based on the AFN equation, by how much would the AFN for the coming year change if Jonson, Inc. decreased the retention from 90% to the new level? All pesos are in millions. Last year’s sales P300.0 Last year’s accounts payable P40.0 Sales growth rate 15% Last year’s notes payable P10.0 Last year’s total assets P500.0 Last year’s accruals P20.0 Last year’s profit margin 15.0% Initial retention…Jonson, Inc. is planning its operations for the coming year, and the CEO wants you to forecast the firm's additional funds needed (AFN). Data for use in the forecast are shown below. However, the CEO is concerned about the impact of a change in the retention ratio from 90% that was used in the past to 50%, which the firm's investment bankers have recommended. Seventy-five percent of the total assets are considered variable. Based on the AFN equation, by how much would the AFN for the coming year change if Jonson, Inc. decreased the retention from 90% to the new level? All pesos are in millions. Last year’s sales P300.0 Last year’s accounts payable P40.0 Sales growth rate 15% Last year’s notes payable P10.0 Last year’s total assets P500.0 Last year’s accruals P20.0 Last year’s profit margin 15.0% Initial retention…onson, Inc. is planning its operations for the coming year, and the CEO wants you to forecast the firm's additional funds needed (AFN). Data for use in the forecast are shown below. However, the CEO is concerned about the impact of a change in the retention ratio from 90% that was used in the past to 50%, which the firm's investment bankers have recommended. Seventy-five percent of the total assets are considered variable. Based on the AFN equation, by how much would the AFN for the coming year change if Jonson, Inc. decreased the retention from 90% to the new level? All pesos are in millions. Last year’s sales P300.0 Last year’s accounts payable P40.0 Sales growth rate 15% Last year’s notes payable P10.0 Last year’s total assets P500.0 Last year’s accruals P20.0 Last year’s profit margin 15.0% Initial retention ratio…