Possible future demand with probabilities Decision alternatives Low (0.25) Moderate(0.35) High(0.4) Sling bag 10 9 Clutch bag 2 12 11 Large bag (4) 4 14 alpha=0.65 Determine the various pay-offs under the followingtechniques: A. Minimax Regret
Q: Construct NPV profiles for Projects A and B. Round your answers to the nearest cent. Do not round…
A: Excel Spreadsheet: Excel Workings:
Q: You are considering Project A, with the following information (Assume all statistics given are…
A: The Capital Asset Pricing Model (CAPM) explains the relative rate of return for an asset or project…
Q: (a) Assuming a discount rate of 7 per cent, what is the NPV of the two projects? Based on the NPV…
A: Net present value (NPV) of an alternative/project refers to the variance between the initial…
Q: A decision maker has prepared the following payoff table. States of Nature Alternative High 90 Low…
A:
Q: Expected value of profit Standard deviation of profit Coefficient of variation of profit Project A…
A: Standard deviation is absolute measure of risk. Higher the standard deviation, higher the risk.…
Q: ou have determined that your risk tolerance is 100. Calculate your utility for the following…
A: Utility function is given by- U (x) = 1 - e(-x/ R) Where, x = Payoff R = Risk Tolerance
Q: A decision maker has prepared the following payoff table. States of Nature Alternative High Low Buy…
A: The statistical technique based on tradeoff quantification among alternative categorization…
Q: 2. For an investor with a minimum rate of return of 8.0%: a) Rank the following non- mutually…
A: The formula for Profitability Index is the present value of future cash flows divided by the initial…
Q: A decision maker has prepared the following payoff table. States of Nature Alternative High Low Buy…
A: Under Maximin criteria, we have to choose the maximum of minimums value of available alternative.
Q: Compute the expected rate of return on investment i, given the following information: Rf=9%;…
A: The expected rate of return refers to the minimum required rate by the investors for the investment.…
Q: whether Alpha, Beta, and/or Gamma should be eliminated because the average rate of return of their…
A: Average rate of return = Estimated average annual income/average investment Average investment =…
Q: The following information is provided: Possible future demand with probabilities Decision…
A: For Single bag maxium payoff is 9 clutch bag=12 large bag=14
Q: Based on the following sensitivity report, what would be the impact of changing the constraint…
A: In Linear Programming Problem, there is a tab which gives out the sensitivity analysis, which helps…
Q: Alternatives X and Y have rates of return of 10% and 18%, respectively. What is known about the rate…
A: It is not true that the highest rate of return always give a better investment result. The problem…
Q: 2. Create a Figure (in Excel or similar) showing the value of the PVNB using different discount…
A: Consider a situation in which the initial cost of the project is $1,000,000 Cash inflow for the next…
Q: Project 1 has a return, I, of 8.4% and Project 2 has a return rate, I, of 8.1%. The incremental rate…
A: Incremental return rate: It is an additional return that an investor earns when two projects are…
Q: Compare two alternatives using i = 10% Alternative X Alternative Y First cost, $ M&O costs, $/year…
A: The projects can be evaluated based on various capital budgeting techniques. However, the decision…
Q: An American up-and-in put has strike $10 and barrier $10.50. At which nodes of a three-step model…
A: An Up-in barriers option is a special arrangement to exercise the option contract, once the price of…
Q: A decision maker has prepared the following payoff table. States of Nature Alternative High Low Buy…
A: Maximin criteria is selecting maximum value out of the minimum values of alternatives available.
Q: A decision maker has prepared the following payoff table. States of Nature Alternative High Low 95…
A: Under Baye's decision rule, Expected payoff under each alternative = (Probability of high *Payoff…
Q: The following payoff table shows profit for a decision analysis problem with two decision…
A: The best decision strategy is calculated by comparing the d1 and d2 of the given strategies.…
Q: A stock’s returns have the following distribution:Assume the risk-free rate is 2%. Calculate the…
A: Prepare a table to calculate the expected return as shown below Resultant table Hence, the…
Q: opportunities with the following accounting rates of return: Project Z 10.47% ets from most…
A: Accounting rate of return (ARR) refers to a financial ratio which is used by the company to compute…
Q: Let each decision variable, A, P, M, H, and G, represent the fraction or proportion of the total…
A: Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…
Q: A State Return % Prob Return % Prob Return % Prob 1 3 0.02 4 0.15 0.25 4 0.03 0.2 0.25 3 5 0.1 10…
A: Telser safety firm margin is the expected return over the minimum return per unit of expected risk.…
Q: The NPV of a project is negative when the discount rate at 8%, but is positive when the discount…
A: IRR is internal rate of return. Internal rate of return is the discount rate where NPV i.e. net…
Q: A longleaf pine investment generated the following Net Present Values (NPV's) at selected Minimum…
A: Internal rate of return (IRR) is the discounting rate at which the net present value of all cash…
Q: Questior The Bornova Innovation Company has three emerging technology options to invest. The…
A: Part (a) The Decision Tree :-
Q: Problem. The WHN Company is going to introduce one of the three new products: a widget, a hummer, or…
A: Decision tree helps in analyzing the outcomes of different projects. It helps in comparing the…
Q: Consider the following payoff Table Decision Alternative D₁ D₂ The State of Nature 0.77 1-0.77 $1 52…
A: Your Payback amount is the amount you'll have to pay in order to fully satisfy the requirements of…
Q: Mike Riskless is considering two projects. He has estimated the IRR for each under three possible…
A: How dispersed the data is indicated by standard deviation. The metric for determining how far each…
Q: Check my Required information a. What is the net present value of the project? (Negative amount…
A: NPV is capital budgeting technique used to evaluate performance of projects. It is arrived at by…
Q: Consider the basic setup of the Diamond-Dybvig (1983) model. Specifically, there are three periods,…
A: Diamond-Dybvig model: The banks in the model act as an intermediary between depositors who prefer to…
Q: Investment Expected Return Standard Deviation 1 0.12 0.30 2 0.15 0.50 3 0.21 0.16 4 0.24 0.21 Based…
A: “Since you have posted a question with multiple sub-parts, we will solve first three subparts for…
Q: Suppose that consumers have utility function U(C) = log(C) where C is the consumption level and log…
A: The utility of an organization or the aggregate economy over a future period of time, under unknown…
Q: A decision maker has prepared the following payoff table. States of Nature Alternative High Low Buy…
A:
Q: Investment 1 Investment 2 Investment 3 Investment 4 RATE Answer 7% 6% 1% NPER 10 Answer 4 24 PV…
A: The concept that helps to evaluate the future or present value of the cash flow is term as the time…
Q: Choices for last three requirements 3. What is the approximate IRR of Project A? a. 28% b. 18% c.…
A: IRR is the internal rate of return. It is the rate at which NPV (net present value) becomes nil.
Q: 6. ROR ANALYSIS Determine which alternative should be selected on the basis of a rate of return…
A: ROR is the rate of return when NPV is equal to zero.
Q: omplete the table below using CAPM model…
A: CAPM model is the model of calculating the required rate of return of stock on the basis of beta,…
Q: 2-a. Using the data computed in requirement (1) above and other data provided in the problem,…
A: Working Notes and formulas to calculate net present value. Working Note:- NPV from year 4 to 12…
Q: QUESTIONS Consider the following payoff Table The State of Nature Decision Alternative 0.82 1-0.82…
A: Payoff table is also called profit table, In this table there is possible ways to represent the…
Step by step
Solved in 7 steps
- Subject: Logistic management calculate EVA and suggest favorable or not ? Investment 1 mioSales 500,000All Expenses 400,000Market opportunity cost 15%From the PW, AW, and FW values shown, the conventional B/C ratio is closest to: (a) 1.27 (b) 1.33 (c) 1.54 (d) 2.76 PW, $ AW, $/Year FW, $ First cost 100,000 16,275 259,370 M&O cost 68,798 11,197 178,441 Benefits 245,784 40,000 637,496 Disbenefits 30,723 5,000 79,687Calculate the profitability of the following proposal using Average rate return (ARR) methodProposal IAutomatic machine Cost OMR 320000Estimated life4.5 yearsEstimated sales P.A 220000Cost : Material OMR 60000 Labour OMR 22000 Variable overheads OMR14000 a.16.53% b.3.19% c.4.62% d.All the options are wrong
- Forrzano plc is considering a new investment and has produced the following NPV figures at two discount rates: Discount rates NPV (£000) 8% 200 16% (80) What is the approximate IRR of the project? (round two 2 d.p.) A 13.71% B 10.29% C 11.71% D 12.29%Calculate the profitability of the following proposal using Average rate of return (ARR) methodProposal I Automatic machine Cost OMR 420000Estimated life 6.5 yearsEstimated sales P.A OMR 175000Cost : Material OMR 60000Labour OMR 22000Variable overheads OMR 14000 a. 16.53% b. All the options are wrong c. 3.42% d. 4.62%Q1) One of the industrial investors needed an analysis that would lead him to a break-even level between the following inputs and outputs: Fixed Cost = 180079 $ , Variable Costs =475, Revenue of saling prices per unit (204 $ ) Y of Products 890 ‘599‘ 917‘ eu‘ 955[ 975‘ sas[ 1,u7‘ 1,159' 1,193‘ 1,209‘ 1,255‘ Require A) Find all lines of anlysis . B) How the produaction reach to B.E.P. C) Based on the available information, show the level of variation from line of production to other annually.
- In Problem 22, if P(s1) = 0.25, P(s2) = 0.50, and P(s3) = 0.25, find a recommended decision for each of the three decision makers. (Note: For the same decision problem, different utilities can lead to different decisions.) 22. Three decision makers have assessed utilities for the following decision problem (payoff in dollars): The indifference probabilities are as follows: a. Plot the utility function for money for each decision maker. b. Classify each decision maker as a risk avoider, a risk taker, or risk-neutral. c. For the payoff of 20, what is the premium that the risk avoider will pay to avoid risk? What is the premium that the risk taker will pay to have the opportunity of the high payoff?Wilson is concerned that this project has multiple its year 1, 2 flows -50 100 0 -50 how many discount rates produce a zero NPV for the project? a. two, discount rates of 0% and 62% b.one, discount rate of 0 percent c. two, discount rates of 0% and 32%Computing Present and Future Values Under Different Assumptions Determine the unknown variables in each of the four separate investment scenarios. Round the RATE to one percentage point (for example, enter 8.5 for 8.54444%). Round NPER, PV, and PMT to the nearest whole number. Use a negative sign only for an amount related to PMT. Investment 1 Investment 2 Investment 3 Investment 4 RATE Answer 7% 6% 1% NPER 10 Answer 4 24 PV $216,000 $9,000 Answer $21,600 PMT $(35,000) $(2,300) $(16,200) Answer TYPE End of period Beg. of period End of period Beg. of period
- Compute the Internal Rate of Return (IRR) for the project Purchase Equipment only, given that it falls between 11% and 13%. The PV Factors for 13% are provided below YEAR PV FACTORS (13%) 1 0.8850 2 0.7831 3 0.6931 Additional Info if you need it: ProForma Income Statement Particulars Amount Amount Sales [a] 2800000 x 1.15 3,220,000 Less Cost of Goods Sold 1400000 x 1.15 =1,610,000 Less Selling & Marketing Costs 75000 x 1.15 = 86,250 Less Admin Expenses 25000 x 1.15 = 28750 Less DepreciationExps.[Unchanged] [b] 50,000 1,775,000 EBIT [a-b] [c] 1,445,000 Less Interest [d] 20,000 EBT [c-d] [d] 1,425,000 Less Income Tax at 20% [e] 285,000 Net Income [d-e] [f] 1,140,000 Dividend Pay -out 50% [f/2] [g] 570,000 Addition to Retained Earnings…If Actual sales are OMR 470000, Total Fixed costs OMR 120000, Selling price per unit OMR 50, and Variable cost per unit OMR 35, which of the following shows Margin of Safety (MS) as amount and as percentage (on sales)? Select one: a. MS=100000 and MS (%)=16 b. MS=62000 and MS (%)=13.42 c. MS=73000 and MS (%)=15.15 d. MS=70000 and MS (%)=14.89 Clear my choicePlease do not give solution in image formate thanku An investment generates the following monthly returns: 10.25%, -8.90%, 7.48%, 8.90%, 7.30%, 5.80%. Comparing with a risk-free benchmark rate of 5% for the time period, the investment is successful (i.e., investment return > 5%).