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- An investor has $24,000 to invest in bonds of AAA and B qualities. The AAA bonds yield an average of 6% and the B bonds yield 10%. The investor requires that at least three times as much money should be invested in AAA bonds as in B bonds. How much should be invested in each type of bond to maximize the return? What is the maximum return? Define the variables needed to solve this problem. Organize your given information. (This part NOT graded, but encouraged.) Write the complete linear programming problem, which includes the objective function and all constraints. Graph and make sure all lines are labeled and shaded/solution region is clear and easy to identify. Create a corner point chart. Remember to mark your solution. Answer in a complete sentence or two: How much should be invested in each type of bond to maximize the return? What is the maximum return?Suppose that you invest $50,000 into a downpayment on a $250,000 house, which has a price appreciation of 3% per year. Your mortgage is fixed at $ 36,000 per year, and your tenants pay you $24,000 per year. Property taxes, maintenance, and other expenses cost $5,000 per year. Suppose that after 25 years, you sell your property. Would it have been better to invest $ 50,000 in the stock market, assuming it has returns of 9% per year over the same time period (25 years)? Why? Show your calculations and justify your answer. For the purposes of this question, suppose that inflation is zero.suppose that you invest $40,000 in a restaurant business. One year later, you sell half of this business to a partner for $110,000. then, a year later, the business is in the red, and you have to pay $50,000 to close the business. what is the rate of return on your investment from this restaurant business? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
- Which of the following is FALSE regarding scenario and sensitivity analysis? Scenario analysis considers a best case (within reason) and worst case (within reason) scenario, along with a base case. Scenario analysis focuses on stand-alone risk, since it doesnt;s consider the project as a part of the larger firm. Sensitivity analysis considers that the project is one part of a larger firm Sensitivity analysis shows how changes in a single variable affects NPV or IRR Scenario analysis assumes all variables take their worst (reasonable) values simultaneously, and best (reasonable) values simultaneously.The discount rate should be chosen when analyzing an investment project using Net Present Value criteria to be a. equal to the rate of return on the next best project. b. equal to the Federal Reserve’s current federal funds rate. c. equal to the market rate of new issue bonds. d. most likely to accepting the project.The Discounted Cash Flow method is the one of best ways to assess the impact of a major investment in an alternative production lay out, as it includes a trade-off of risk and use of capital.
- Data point X value is 110 and has an assigned weight of 3 Data point Y value is 290 and has an assigned weight of 13 Data point Z value is 260 and has an assigned weight of 7 What is the percentage weight of the total for data point Y? Enter your answer as a percent and round to 1 decimal place.Show in excel A firm has a capital budget of $30,000 and is considering three possible independent projects. Project A has a present outlay of $12,000 and yields $4, 281 per annum for 5 years. Project B has a present outlay of $10,000 and yields $4,184 per annum for 5 years. Project C has a present outlay of $17,000 and yields $5,802 per annum for 10 years. Funds which are not allocated to one of the projects can be placed in a bank deposit where they will earn 15%. (a) Identify six combinations of project investments and a bank deposit which exhaust the budget. (b) Which of the above combinations should the firm choose: when the reinvestment rate is 15%? (ii) when the reinvestment rate is 20%?Suppose you manufacture 10 million hard drives per year specifically for Dell laptop computers. If your average variable cost C=$20/unit, annualized cost of investment to build a hard drive factory I=$30 million, and market price (bailout market price in the event Dell does not buy) Pm=$22/unit, what is your company's RSI (relationship specific investment)?
- Dividend yield is defined as Multiple Choice ___ the last four quarters of dividend income expressed as a percentage of the par value of the stock. ___ the last four quarters of dividend income expressed as a percentage of the current stock price. ___ the last dividend paid expressed as a percentage of the current stock price. ___ the next dividend to be paid expressed as a percentage of the current stock price.1)what is the best project based on simple payback 2) What is the best project based on discounted payback 3)What is beta B/C ratio 4) What is gammas B/C ratioA pharmaceutical company has spent $500 million to date working on a blood pressure treatment. It has to decide whether to spend another $500 million today to get final approval from the FDA in two years. Once approved, expected profits will be $50 million per year for the foreseeable future. The firm’s cost of capital is 5%. Should the firm proceed? (Hint: use the perpetuity formula used to value projects found in the readings to find the value of the profit stream that starts in two years, and then discount that.) 2. Suppose some doctors do not see any advantage of using the drug over what they currently prescribe for patients and the profit stream is only $25 million per year. Should the firm proceed? 3. Going back to the original information, suppose there is a delay of a year in getting FDA approval. Should the firm proceed? 4. Going back to the original information, suppose the firm’s’ cost of capital is 10%. Should the firm proceed?