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You are considering investing in one of two projects, which have the following returns and probabilities of occurrence:
(a) Compute the mean return for each project.
(b) Compute the variance of return for each project.
(c) Which project would you prefer, and why?
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Solved in 3 steps
- True/False AVC can fall even when MC is risingYour firm uses a continuous review system and operates52 weeks per year. One of the SKUs has the followingcharacteristics.Demand 1D2 = 20,000 units>yearOrdering cost 1S2 = $40>orderHolding cost 1H2 = $2>unit>yearLead time 1L2 = 2 weeksCycle@service level = 95 percentDemand is normally distributed, with a standard deviation ofweekly demand of 100 units.Current on-hand inventory is 1,040 units, with no scheduledreceipts and no backorders.a. Calculate the item’s EOQ. What is the average time, inweeks, between orders?b. Find the safety stock and reorder point that provide a95 percent cycle-service level c. For these policies, what are the annual costs of (i) holdingthe cycle inventory and (ii) placing orders?d. A withdrawal of 15 units just occurred. Is it time to reor-der? If so, how much should be ordered?Pls help with below homework. A particular apartment building has changed ownership three times in 10 years. and the price has increased each time a minimum of 23%. Price increases for similar apartment buildings have averaged 17% per sale in that time. Is a licensee in Illinois justified in guaranteeing a prospective buyer of this apartment building at least an 8% profit on the resale of the property? Select the correct option from below : A) Yes, because this apartment building has a proven profitability history. B) Yes, because the average price increase for similar apartment buildings is more than twice the target amount. C) No, because the licensee should never guarantee a future profit of any amount. D) No, because past sales figures cannot reliably predict future prices.
- choose correct option plz. AsapI want you to provide me the Cash Flow diagram of the problem. Only cash flow diagram, the solution is already there. Thanks in advance! The annual estimated cash flow is $140,000. The salvage value will be 12% of the initial price after 5 years. The discount rate (r) is 18% Let us assume the initial price of the doughnut machine be X. PV of cash inflows=PV of cash outflows$140,000×PVAF4,18%+.12X×PVF5,18%=X$140,000×2.69006180465+.12X×0.43710921621=X$376,608.652651=X-0.05245310594$376,608.652651=0.94754689406XX=$397,456.479475 The maximum purchase price of the doughnut machine is $397,456.48.If the PW of an investment is negative, then we will recommend the investment. True or False?
- 2.4.1 Total Cost in Material SelectionIn many cases, economic selection among materials cannot be based solely on the costs ofmaterials. Frequently, a change in materials will affect the design and processing costs, and shipping costsmay also be altered.Care should be taken in making economic selections between materials to ensure that anydifferences in shipping costs, yields, or resulting scrap are taken into account. Commonly, alternativematerials do not come in the same stock sizes, such as sheet sizes and bar lengths. This may considerablyaffect the yield obtained from a given weight of material. Similarly, the resulting scrap may differ forvarious materials.In addition to deciding what material a product should be made of, there are often alternativemethods or machines that can be used to produce the product, which, in turn, can impact processingcosts. What could be the factors affecting the cost of materials that one should consider?"All growth models. You are evaluating the potential purchase of a small company that currently generates $42,500 in cash flow after taxes (D0 = $42,500). Based on a review of similar risk investment opportunities, you should earn a return rate of 18% from the proposed purchase. Since you're not very sure about future cash flows, you decide to calculate the value of the company assuming some possibilities for the cash flow growth rate. a) What is the value of the company if cash flows are expected to grow at an annual rate of 0% from now on? b) What is the value of the company if cash flows are expected to grow at a constant annual rate of 7% from now on? c) What is the value of the company if cash flows are expected to grow at an annual rate of 12% for the first 2 years and then, starting from year 3, the growth rate decreases to a constant annual rate of 7%?"NewTech wants to consider risk and return in evaluating the following alternatives: c. What alternative will you choose based onc.1 MAXIMAX?c.2 MAXIMIN?c.3 MINIMAX REGRET?
- A. Project A has a net present value of zero when the discount factor of 20% is used. How much return is the project earning?B. If project A above is earning K150, 000 per year in perpetuity, what is the initial investment cost of the project? C. Company A expects to generate K150, 000 cash flows per year in perpetuity and the risk adjusted discount rate is 20%. What should be the certainty equivalent cash flows when the risk free rate is 10%(Need answer ASAP) A man decided to Invest in an equipment worth PHP 12,000,000.00 capital with the following data: Expected revenue - PHP 5.8M/year Cost of Operation and Maintenance - PHP2.4/year Taxes and Insurance. - 2% of the first cost/year Expected earnings is 12% minimum Life of the equipment is 5 years with expected value of PHP1.2M after 5 years a. Determine the desirable investment using ROR method and AW method b. What are the ways and means to make it desirable investment c. In what case we should use the present worth and future worth method of economy study?Kwame Nkrumah University of Cape Coast, Legon spent GHS1.8 million to install solar panels atop a parking garage. These panels will have a capacity of 500 kw, have a life expectancy of 20 years and suppose the discount rate is 10%.a. If electricity can be purchased for costs of GHS0.10 per kwh, how many hours per year will the solar panels have to operate to make this project break even?b. If efficient systems operate for 2,400 hours per year, would the project break even?c. The university is seeking a grant to cover capital costs. How big of a grant would make this project worthwhile (to the university)?