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Rate of Return  1745 Wordsch10 Student: ___________________________________________________________________________ 1. The capital gains yield plus the dividend yield on a security is called the: A. geometric return. B. average period return. C. current yield. D. total return. 2. The expected return on a security in the market context is: A. a negative function of execs security risk. B. a positive function of the beta. C. a negative function of the beta. D. a positive function of the excess security...1,745 Words  12 Pages

Accounting Rate of Return  277 WordsAccounting rate of return The accounting rate of return (ARR) is a way of comparing the profits you expect to make from an investment to the amount you need to invest. The ARR is normally calculated as the average annual profit you expect over the life of an investment project, compared with the average amount of capital invested. For example, if a project requires an average investment of £100,000 and is expected to produce an average annual profit of £15,000, the ARR would be 15 per cent....277 Words  1 Page

annual rate of return  472 WordsAccounting rate of return Accounting rate of return (also known as simple rate of return) is the ratio of estimated accounting profit of a project to the average investment made in the project. ARR is used in investment appraisal. Formula Accounting Rate of Return is calculated using the following formula: ARR = Average Accounting Profit Average Investment Average accounting profit is the arithmetic mean of accounting income expected to be earned during each year of the project's life...472 Words  3 Pages

Internal Rate of Return  835 WordsINTERNAL RATE OF RETURN Many companies wants to have a return on their investment in a few years and begin to evaluate their projects optimistically calculating an internal rate of real return not yielding results in the end. This does not end up being expected by the companies; According to the article the authors John C. Kelleher and Justin J. MacCormack . They suggest that there is a tendency to a risky behavior, Companies started to run the risk of creating unrealistic numbers for...835 Words  3 Pages
All Rate of return Essays

Internal Rate of Return  2205 WordsInternal Rate of Return Internal Rate of Return (IRR) Calculation of the true interest yield expected from an investment. Explanation of Internal Rate of Return. What is Internal Rate of Return? Definition The Internal Rate of Return (IRR) is the discount rate that delivers a net present value of zero for a series of future cash flows. It is an Discounted Cash Flow (DCF) approach to valuation and investing. As is Net Present Value (NPV). IRR and NPV are widely used to decide which...2,205 Words  14 Pages

Internal Rate of Return  653 WordsInternal Rate of Return In investment decision analysis you may need to calculate internal rate of return. “Internal rate of return (IRR) is the discount rate that gives the project a zero NPV” (McLaney, 2006). It is a good choice to use for investment projects. There is a formula for the internal rate of return: (A is the lower discount rate and B is the higher rate, a is the NPV at the lower rate and b is the NPV at the higher rate.) For example the Net Present Value (NPV) is 88 when...653 Words  2 Pages

Accounting Rate of Return (Arr)Accounting Rate of Return (ARR) ARR provides a quick estimate of a project's worth over its useful life. ARR is derived by finding profits before taxes and interest. ARR is an accounting method used for purposes of comparison. The major drawbacks of ARR are that it uses profit rather than cash flows, and it does not account for the time value of money. ARR is most often used internally when selecting projects. It can also be used to measure the performance of projects and subsidiaries within...408 Words  2 Pages

Rate of Return and Stock  389 WordsAshley King Fin 534 Chapter 6 Hwrk Feb 2nd, 2014 1. You are considering investing in one of the these three stocks: Answer: B, B;A 2. Your friend is considering adding one additional stock to a 3stock portfolio, to form a 4stock portfolio. She is highly risk averse and has asked for your advice. The three stocks currently held all have b = 1.0, and they are perfectly positively correlated with the market. Potential new Stocks A and B both have expected returns of 15%, are in...389 Words  2 Pages

Internal Rate of Return  574 Wordspart one 1. Risk preferences Sharon Smith, the financial manager for Barnett Corporation, wishes to evaluate three prospective investments: X, Y, and Z. Currently, the firm earns 12% on its investments, which have a risk index of 6%. The expected return and expected risk of the investments are as follows: Investment Expected return Expected risk    index  X 14% 7%  y...574 Words  3 Pages

3 Factors That Influence the Rate of Return3 Factors that Influence Rate of Return Any bondholder, or any investor for that matter, will allow three factors to influence his or her required rate of return. The three factors are the following: real (pure) rate of return, inflation, and risk premium. These three factors equal the risk free rate which is the rate of return of an investment with no risk of financial loss. This is also the rate that investors would expect from an absolutely riskfree investment over a period of time....510 Words  2 Pages

Rate of Return and Nonnegativity ConstraintsLINEAR PROGRAMMING FORMULATION PROBLEMS AND SOLUTIONS 714 The Electrocomp Corporation manufactures two electrical products: air conditioners and large fans. The assembly process for each is similar in that both require a certain amount of wiring and drilling. Each air conditioner takes 3 hours of wiring and 2 hours of drilling. Each fan must go through 2 hours of wiring and 1 hour of drilling. During the next production period, 240 hours of wiring time are available and up to 140 hours of...4,454 Words  16 Pages

Internal Rate of Return and Tangshan Mining26) Company K is considering two mutually exclusive projects. The cash flows of the projects are as follows: Year  Project A  Project B  0  $2,000,000  $2,000,000  1  500,000   2  500,000   3  500,000   4  500,000   5  500,000   6  500,000   7  500,000  5,650,000  a. Compute the NPV and IRR for the above two projects, assuming a 13% required rate of return. b. Discuss the ranking conflict. c. What decision should be made regarding...837 Words  4 Pages

Internal Rate of Return and Slab CastingN ucor P reparation Questions 1. What have been the sources of Nucor’s competitive advantage so far (namely, up until 1986)? Do you think “business as usual” is likely to continue generating the same profits for Nucor? Why? 2. What are the technological risks associated with thinslab casting? (What could go wrong and how bad would it be? You may find the spreadsheet posted with these preparation questions helpful here.) 3. What are the market risks associated with thinslab casting?...544 Words  2 Pages

Hearing: Internal Rate of Return and Terminal ValueHarmonic Hearing 1) For both financing alternative, develop a model that shows forecasted revenues, expenses, profits, and free cash flows generated by Harmonic in years one through seven. Model shown in chart below. • What is the terminal value of the company under each scenario? As you can see in the graph below, the terminal value for the company if it takes the equity route is about $106M, where if it takes the debt route its terminal value will be about $45M. • What cash payments...837 Words  3 Pages

Investment: Rate of Return and Current Share PriceUTD ID: NAME: UNIVERSITY OF TEXAS AT DALLAS SCHOOL OF MANAGEMENT FIN6310: INVESTMENT MANAGEMENT SOLUTIONS TO REVIEW QUIZ PROF. ARZU OZOGUZ SPRING 2013 Make, but state clearly, all the assumptions that you feel are necessary to answer any particular question. To obtain partial credit, make sure you show all your work. Please make sure you sign the Honor Pledge: I have neither given nor received any aid on this examination.________________ HELPFUL FORMULAS , , , , 1 , 1 , , 1 1...694 Words  3 Pages

Risk and Rates of Return North Central UtilitiesRisk and Rates of Return – North Central Utilities Content 1.) Introduction 3 2.) Question 1 3 3.) Question 2 4 4.) Question 3 4 5.) Question 4 5 6.) Question 5 5 7.) Question 6 6 8.) Question 7 7 9.) Question 8 8 10.) Question 9 9 11.) Question 11 9 12.) List of References 11 13.) Appendix 12 1. Introduction In 1996, North Central Utilities (hereinafter NCU) is confronted...2,544 Words  8 Pages

Investment Evaluation Methods and Required Rate of Return in Finnish Publicly Listed CompaniesLTA 1/04 • P. 9– 2 4 EVA LILJEBLOM AND MIKA VAIHEKOSKI* Investment Evaluation Methods and Required Rate of Return in Finnish Publicly Listed Companies ABSTRACT Financial literature advocates the use of the Net Present Value method for the evaluation of investments. Its key parameter is the required rate of return on equity, which is to be calculated using the Capital Asset Pricing Model or a similar model especially if the company is publicly listed. However, there is ample...6,523 Words  43 Pages

Return on Investment  1463 WordsTable of Contents 1. Introduction 2 2. Literature review 3 2.1. ROI Case Study: IBM November 2012 (Nucleus Research) 3 3. Methodology 4 4. Analysis 5 4.1. Adani Power 5 4.2. Torrent Power 6 5. Conclusion 7 1. Introduction An investment is an exposure of cash that has the objective of producing cash inflows in the future. The worthiness of an investment is measured by how much cash the investment is expected to generate. The analysis of Return on Investment (ROI) is a...1,463 Words  5 Pages

Investment and Return  575 WordsAlex Sharpe’s Portfolio Student Assignment 1. Returns and Risk Estimate and compare the returns and variability (i.e. annual standard deviation over the past five years) of Reynolds and Hasbro with that of the S&P 500 Index. Which stock appears to be riskiest? Reynolds appears to be the riskiest stock based on the returns and variability alone currently holding the highest average return out of two at 1.87%. With their higher return rate over the three they also hold the highest...575 Words  3 Pages

Risk & Return  2515 Wordsa. What are investment returns? What is the return on an investment that costs $1,000 and is sold after 1 year for $1,100? Investment returns is the expectation of earning money in the future on the amount of money invested. The return is the financial performance of the investment. The return is the difference between the amount invested and the amount you are returned after said investment. There are two ways to show return on investment. 1. By dollar return. Amount to be...2,515 Words  9 Pages

Risk and Return  1156 WordsANALYZING A PORTFOLIO a 58. You want your portfolio beta to be 1.20. Currently, your portfolio consists of $100 invested in stock A with a beta of 1.4 and $300 in stock B with a beta of .6. You have another $400 to invest and want to divide it between an asset with a beta of 1.6 and a riskfree asset. How much should you invest in the riskfree asset? a. $0 b. $140 c. $200 d. $320 e. $400 ANALYZING A PORTFOLIO d 59. You have a $1,000 portfolio which is invested in stocks...1,156 Words  6 Pages

Return on Investment  2285 WordsReturn On investment CONTENTS INTRODUCTION 6 The ROI Concept 6 Simple ROI for Cash Flow and Investment Analysis 7 Competing Investments: ROI From Cash Flow Streams 7 ROI vs. NPV, IRR, and Payback Period 10 Other ROI Metrics 11 LIST OF TABLES Table 1 6 Table 2 7 Table 3 8 Table 4 8 Table 5 8 Table 6 ………………………………....................... 9 Table 7 ………………………………...................... 10 Return on Investment: What is ROI analysis? Return on Investment (ROI)...2,285 Words  11 Pages

Return on Investment  1457 Words ROI Project: Phase #1 Return on Investment (ROI): An examination of ROI financial analysis and its historical roots with the DuPont Company Return on Investment (ROI): An examination of ROI financial analysis and its historical roots with the DuPont Company Like it or not, with the current state of the economy, as well as, enforced implications of the Affordable Care Act, a large number of hospitals and healthcare agencies will close their doors for...1,457 Words  5 Pages

Investment and Return  600 Words1. You are offered a Tnote that pays $1,000 in 9 months (or 270 days) for $910. You have $910 in a bank that pays a 5% nominal rate, with 365 daily compounding. You plan to leave the money in the bank if you don’t buy the riskfree Tnote. Which investment should you choose? Use the following all three solution methods to verify your answer. Greatest future wealth: FV Figure out FV of $910 left in a bank with 9 months, and then compare with Tnote’s FV=$1,000 Inputs: N = 270, I/Y...600 Words  3 Pages

Risk & Return  333 WordsRisk and Return Assignment Questions 1. Suppose a stock begins the year with a price of $25 per share and ends with a price of $35 per share. During the year it paid a $2 dividend per share. What are its dividend yield, its capital gain, and its total return for the year? 2. An investor receives the following dollar returns a stock investment of $25: $1.00 of dividends Share price rise of $2.00 Calculate the investor’s total return. 3. Below are the probabilities for the economy’s...333 Words  4 Pages

Investment and Rate  1787 Words1. Suppose you discover a treasure chest of RM10 billion in cash a. Is this a real or financial asset? Answer: Yes. 10 billion cash is the financial asset. This is because financial assets only obtain its monetary value from a contractual agreement of what it represents. In contrast, real asset itself has the physical value. b. Is society any richer for the discovery? Answer: No. This is because the cash does not contribute to the productive capacity of the economy. c. Are you...1,787 Words  6 Pages

Integrated Case: Risk and ReturnIntegrated Case 823 Merrill Finch Inc. Risk and Return Assume that you recently graduated with a major in finance. You just landed a job as a financial planner with Merrill Finch Inc., a large financial services corporation. Your first assignment is to invest $100,000 for a client. Because the funds are to be invested in a business at the end of 1 year, you have been instructed to plan for a 1year holding period. Further, your boss has restricted you to the investment...4,768 Words  30 Pages

Risk and Return Analysis  7435 WordsFINANCIAL MANAGEMENT – I RISK AND RETURN ANALYSIS SUBMITTED TO DR. SUSHMA VISNANI BY ABHISHEK DAS AVANIKANT MISHRA DAUD QIDWAI ANKIT TRIPATHI APURBA PRASAD NATH CONTRIBUTION Our project deals with Banking industry. In the project the various banks which are taken into account are Allahabad Bank, Canara Bank, Punjab National Bank, State Bank of India, and Union Bank of India. Each of the group members took up each of the bank and did their respective analysis. The banks which...7,435 Words  56 Pages

Return on Invested Capital NotesCh 4: Return on Invested Capital 1. Drivers of Return on Invested Capital ROIC = (1Tax Rate)*((Price per UnitCost per Unit)/Invested Capital per Unit) A company with a competitive advantage will have a higher ROIC because it either can charge a premium price or can produce at a more efficient cost. The structureconductperformance (SCP) framework is the strategy model that underlies our thinking about what drives competitive advantage and ROIC. The structure of an industry influences...667 Words  3 Pages

3353 Risk Return  1122 WordsMPU 3353 Personal Financial Planning in Malaysia Investment Basics: Understanding Risk and Return 101 Introduction Risk is a fundamental component of investing. Risk must be understood and managed. In selecting securities, it is important to understand and measure market risk. Then securities can be selected by choosing securities with expected returns that exceed required returns. 102 Chapter Objectives To grasp the nature of risk and its sources and to relate risk to...1,122 Words  10 Pages

Risk and Return Introduction  265 WordsRisk and return are most important concepts in finance. Risk and return concepts are basic to the understanding of the valuation of assets or securities. Return expresses the amount which an investor actually earned on an investment during a certain period. Return includes the interest, dividend and capital gains: while risk represents the uncertainty associated with a particular task. In financial terms, risk is the chance or probability that a certain investment may or may not deliver the...265 Words  1 Page

Lecture 5 Risk and ReturnPART 1 INTRODUCTION TO INVESTMENTS FN 3220 Investments CONTENT 1. 2. 3. 4. 5. The Investment Environment Asset Classes and Financial Instruments How Securities are Traded Mutual Funds and Other Investment Companies Risk and Return Inflation and real rate of return Inflation rate (i): Rate of increase in price level Nominal rate of return (R): Percentage change in dollars, i.e. return unadjusted for inflation Real rate of return (r): Percentage change in buying power, i.e. return adjusted...1,286 Words  17 Pages

Return on Investment Case StudyReturn on Investment case study Table of Contents INTRODUCTION ................................................................................................................................. 2 Return On Investment ................................................................................................................... 3 PART 1............................................................................................................................................... 4...2,471 Words  9 Pages

Percent Geometric Return  600 Words1. Calculating Returns ( LO1, CFA1) Suppose you bought 100 shares of stock at an initial price of $ 37 per share. The stock paid a dividend of $ 0.28 per share during the following year, and the share price at the end of the year was $ 41. Compute your total dollar return on this investment. Does your answer change if you keep the stock instead of selling it? Why or why not? 2. Calculating Yields ( LO1, CFA1) In the previous problem, what is the capital gains yield? The dividend yield? What...600 Words  2 Pages

Exercise: Return on Investment  1053 Words Chapter 11 Exercises 115 Return on Investment (ROI) Provide the missing data in the following table for a distributor of Martial arts products: 119 Return on Investment (ROI) and Residual Income Relations A family friend has asked your help in analyzing the operations of three anonymous companies operating in the same service sector industry. Supply the missing information in the table below: 1118 Return on Investment (ROI) and Residual Income “I know headquarters wants us to add that...1,053 Words  4 Pages

Risk and Return Homework AssignmentHomework ES 1. (TCO 8) The historical returns on largecompany stocks, as reported by Ibbotson and Sinquefield, are based on: (Points : 3) the largest 20 percent of the stocks traded on the NYSE. the stocks of the largest 10 percent of the publicly traded firms in the U.S. all of the stocks listed on the NYSE. the stocks of the 500 companies included in the S&P 500 index. 2. (TCO 8) If the financial markets are efficient, then: (Points : 3)...626 Words  3 Pages

Investment and Hurdle Rate  392 WordsCase # 15 Teletech Corp Table of Contents 1. Introduction Teletech Corporation is headquartered in Dallas, Texas. The company defines itself as a “provider of integrated information movement and management.” Teletech has two main business segments: Telecommunications Service, Which provided longdistance, local, and cellular service to business and residential customers, and secondly, the Products and Systems segment, which engaged in the manufacture of computing...392 Words  2 Pages

Raising the Interest Rate  998 Words Raising the Interest Rate Principles of Finance Introduction After years of declining interest rates, we are facing a dilemma; should the Federal government increase rates to contain inflation, or keep rates low to boost the US economy? Increases in consumption of oil, metals, materials, and food, both foreign and domestic, are increasing demand. Prices are rising on a global scale as demand increases. Additionally, the US is experiencing rising costs for healthcare and education....998 Words  4 Pages

Compound Interest and Rate  1839 WordsSolution to Problem Set 1 1. You are considering various retirement plans. Your goal is to have a lump sum of $3,000,000 available (‘in the bank’) when you retire at age 67. The various plans, with their payment schedules, are listed below. In each case, calculate the payment(s) that must be made into the plan to ensure that you have the $3,000,000 available. For each plan, you may assume that your opportunity cost of funds is 6% per year; for each plan, you may assume that the phrase...1,839 Words  9 Pages

Investment and Hurdle Rates  3185 WordsTELETECH CORPORATION, 1996 Raiders Dials Teletech Wakeup Call Needed Says Investor New York (AP)The reclusive billionaire Victor Yossarian has acquired a 10 percent stake in Teletech Corporation and has demanded two seats on the firm’s board of directors. The purchase was revealed yesterday in a filing with the Securities and Exchange Commission, and separately in a letter to Teletech’s CEO, Maxwell Harper. “The firm is misusing its resources and not earning...3,185 Words  11 Pages

Risk Adjusted Discount RateTHE DIRECT D E T E R M I N A T I O N of RISKADJUSTED DISCOUNT RATES and LIABILITY BETA RUSSELL E. BINGHAM T H E H A R T F O R D FINANCIAL SERVICES G R O U P Table of Contents Page 2 3 5 7 8 11 12 13 14 14 15 16 17 17 18 Subject Abstract 1. Summary 2. Total Return Model 3. AfterTax Discounting 4. Derivation of RiskAdjusted Discount Rate and Liability Beta Figure l : Baseline Risk / Return Line vs Leverage 5. Liability Beta Figure 2: Equity vs Liability Beta Figure 3: Equity Beta...7,523 Words  34 Pages

Annual Percentage Rate  792 WordsWhich one of the following statements is correct concerning annual percentages rates (APRs)? Answer: The APR is equal to the monthly interest rate multiplied by 12 Give an interest rate of zero percent, the future value of a lump sum invested today will always: Answer: remain constant Answer: II and IV A firm created as a separate and distinct legal entity that may be owned by one or more individuals or entities is called a: corporation The capital structure of a firm refers to...792 Words  3 Pages

Investment and Effective Annual RateHomework #1 Financial Management Prof. S.J. Kim BIZ211907 Fall, 2012 1. What is the difference between accounting income and cash flow? Which do we need to use when making decisions? 2. Why is there a difference between the interest rates on AAA corporate bonds and U.S. Treasury notes? 3. Your father is about to retire. His firm has given him the option of retiring with a lump sum of $50,000 in ten years or an annuity of $8,000 for ten years. Which is worth more now, if the...670 Words  3 Pages

Investment and Percent Aftertax ReturnCredit Policy Decisions Christian L. Proulx Axia College of University of Phoenix Credit Policy Decisions Collins Office Supplies is considering a more liberal credit policy to increase sales, but expects that 9 percent of the new accounts will be uncollectible. Collection costs are 5 percent of new sales, production and selling costs are 78 percent, and accounts receivable turnover is five times. Assume income taxes of 30 percent and an increase in sales of $80,000. No other asset buildup...262 Words  2 Pages

Risk and Return on Real Estate InvestingCommercial Real Estate Return Performance: A CrossCountry Analysis by David C. Ling and Andy Naranjo* *Department of Finance, Insurance, and Real Estate Warrington College of Business University of Florida Gainesville, FL 326117168 Phone: (352) 3920153 Fax: (352) 3920301 March 2000 Latest Revision: December 2000 We thank Piet Eichholtz, Pat Hendershott, Charles Ward, two anonymous referees, and participants at the MaastrichtCambridge Property Investment Symposium for valuable...13,134 Words  39 Pages

Risk and Return and Cost of Capital ProblemsP81 a) Expected Rate of Return $ $ $ Y 55,000 6,800 55,000 X Previous Market Value Cash Flow Current Market Value X 20,000 $ 1,500 $ 21,000 $ Y 12.50% 12.36% X: rt = (Ct + P rt = ($1,50 rt = 0.125 = b) Both investments are equally risky. Keel should recommend Investment X because it has a Pt  Pt1) / (Pt1) Y: rt = (Ct + Pt  Pt1) / (Pt1) 0 + $21,000  $20,000) / ($20,000) rt = ($6,800 + $55,000  $55,000) / ($55,00 = 12.5%...893 Words  20 Pages

Chapter 5: Introduction to Risk, Return, and theCHAPTER 5: INTRODUCTION TO RISK, RETURN, AND THE HISTORICAL RECORD PROBLEM SETS 1. The Fisher equation predicts that the nominal rate will equal the equilibrium real rate plus the expected inflation rate. Hence, if the inflation rate increases from 3% to 5% while there is no change in the real rate, then the nominal rate will increase by 2%. On the other hand, it is possible that an increase in the expected inflation rate would be accompanied by a change in the real rate of interest....2,025 Words  14 Pages

How Good Are Private Equity Returns?How Good Are Private Equity Returns? This article by Robert Conroy and Robert Harris researches the historical successfulness of investments in firms from the private sector as opposed to investments in firms traded publicly. The article begins by referencing how private equity investment has grown from what they believe is a correlation to huge management fees, reduced transparency and concern over job loss. More institutions are taking this path in search of higher returns and...588 Words  2 Pages

Time Value of Money and Positive Rateb 1. Your grandmother invested one lump sum 17 years ago at 4.25 percent interest. Today, she gave you the proceeds of that investment which totaled $5,539.92. How much did your grandmother originally invest? a. $2,700.00 b. $2,730.30 c. $2,750.00 d. $2,768.40 e. $2,774.90 d 2. Forty years ago, your father invested $2,500. Today that investment is worth $107,921. What is the average rate of return your father earned on his investment? a. 8.50 percent b. 9.33 percent c. 9.50...712 Words  4 Pages

Finance: Interest and Riskfree RateQuestion 1 ( 5 points) In a world with no frictions (taxes, etc.), value is created by how you finance a project. True. False. Question 2 (5) The return of equity is equal to the return on debt of a project/firm Always true. Never true. Sometimes true. Question 3 (10 points) Moogle, Inc. is in the same business as Google, Inc., but has recently retired all its debt to become an allequity firm. Its return on equity has dropped from 12.25% to 10.60% as a result of this. Google, Inc....1,030 Words  3 Pages

Net Present Value and Hurdle RateTeletech Corporation 1. What is a hurdle rate? How do you use it in a project evaluation? Hurdle rate is the minimum amount of return on a project the company is willing to accept before starting a project. It is used in project evaluation to evaluate the amount of return on the project. A common method for evaluating the hurdle rate is apply the discounted cash flow method to the project, like net present value. 2. How does Teletech Corporation currently use the hurdle rate? They...292 Words  1 Page

Finance: Net Present Value and RateTime Value of Money Exercise 1. If you invest $1000 today at an interest rate of 10% per year, how much will you have 20 years from now, assuming no withdrawals in interim? 2. a. If you invest $100 every year from the next 20 years starting one year from today and you earn interest of 10% per year, how much will you have at the end of the 20 years? b. How much must you invest each year if you want to have $50000 at the end of the 20 years? 3. What is the present value of the...2,892 Words  7 Pages

ASS2 FIN 3331 Risk And Return AssignmenNguyen Duc Thuan ID: 1349672 FIN 3331 – Risk & Return Assignment 1. Answers: The expected return of this stock is: E[RJ] = 0.2(12%) + 0.35(18%) + 0.3(10%) + 0.15(10%) = 7.2% The standard deviation is: 2J = 0.2(0.12 – 0.072)2 + 0.35(0.18 – 0.072)2 + 0.3(0.1 – 0.072)2 + 0.15(0.1 – 0.072)2 = 0.0135 J = = 11.63% 2. Answers: The average return and standard deviation of Large co. stock return is: Sum of Large co. stock = 14.69 – 26.47 + 37.23 + 23.93 – 7.16 + 6.57 = 19.41 Mean =...252 Words  3 Pages

The Cash Flow, Return and Risk Characteristics of Private EquityThe cash flow, return and risk characteristics of private equity * † Alexander Ljungqvist Stern School of Business New York University and CEPR Matthew Richardson Stern School of Business New York University and NBER First draft: November 14, 2002 This draft: January 9, 2003 We are grateful to an anonymous institutional investor for making the data used in this study available, and to Eric Green for many helpful discussions and suggestions. We also thank the Salomon Center at NYU...18,728 Words  57 Pages

Total Cost of Ownership vs Return on Investment (Roi)Total Cost of Ownership: This is defined as the an approach for measuring financial returns which involves consideration of all the additional costs required to support and maintain the item purchased for its full useful life and adding such costs to the purchase price (Reh, n.d). Calculating TCO No general formula for calculating TCO exist the general principle is Purchase Costs + All other additional costs. In IT investments some additional costs might be cost of maintenance, support...900 Words  3 Pages

Internal Rate of Return (IRR) and Net Present Value (NPV) are both powerful tools used in business to determine whether or not to invest in a particular project; both methods have its pros and cons.Internal Rate of Return (IRR) and Net Present Value (NPV) are both powerful tools used in business to determine whether or not to invest in a particular project; both methods have its pros and cons. If given a choice I would choose NPV, because of the potential to anticipate profitability. As it is assumed that the objective of a firm is to create as much shareholder wealth as possible for its owners through the efficient use of resources, the preferred method in determining whether or not to...853 Words  3 Pages

Return on Investment vs Total Cost of Ownership of It ProjectsReturn on Investment (ROI) and Total Cost of Ownership: A Comparison Introduction When a business decision is made to make an investment, the need for metrics arises to decide the profitability of the investment. These metrics can be measured before an investment is made to gain an insight into expected returns or they can be measured at regular intervals, (quarterly or yearly) to analyse the profitability of the investment. There are quite a few metrics that are used to calculate...1,128 Words  3 Pages

Return on Investment in Information Technology: a Guide for ManagersReturn on Investment In Information Technology: A Guide for Managers Anthony M. Cresswell Center for Technology in Government University at Albany, SUNY 187 Wolf Road, Suite 301 Albany, NY 12205 Phone: (518) 4423892 Fax: (518) 4423886 Email: [email protected] www.ctg.albany.edu August 2004 ©2004 Center for Technology in Government The Center grants permission to reprint this document provided this cover page is included. CENTER FOR TECHNOLOGY IN GOVERNMENT—RETURN ON...21,383 Words  75 Pages

How to Calculate Return on Investment (Roi) for Property Rental YieldsCase Study: How to Calculate Return Profits on Rental Property Investment make more money through rental income property investment Property Profile Property Type : Serviced Apartment Size : 821 square feet Purchase Price : $ 235,900.00 Down Payment : $ 23,590.00 Home Loan Amount : $ 212,310.00 Home Loan Installment : $ 1,173.00 per month Gross Rental : $ 2,200.00 per month Expenses : $ 832.37 per month * Service Charges = $ 164.05 * Sinking Fund = $ 16.79 * Quit...585 Words  3 Pages

How Can Risk Influence Risk Premium? How Are Risk and Return Related?How can risk influence risk premium? How are risk and return related? Risk and return are the fundamental basis upon which investors make their decision whether or not they should invest in a particular investment. How they are related and the influence between the two, is the decision making process that all investors must weigh up. This essay will show how risk can influence risk premium, outlining their relationship and how risk and return are related. Within any investment there is a...1,262 Words  4 Pages

Just One, Inc., Has Two Mutually Exclusive Investment Projects, P and Q, Shown Below. Suppose the Market Interest Rate Is 10 Percent.P 3–4: Just One, Inc. Just One, Inc., has two mutually exclusive investment projects, P and Q, shown below. Suppose the market interest rate is 10 percent. The ranking of projects differs, depending on the use of IRR or NPV measures. Which project should be selected? Why is the IRR ranking misleading? Using the IRR method will result in project Q being selected over P due to its higher rate of return. Using the NPV method would result in choosing project P because of its higher NPV....1,564 Words  6 Pages

Coke vs. Pepsi  4339 WordsCOKE vs. PEPSI Finance Case Writeup In this writing, we will discuss about WACC, EVA, their uses in evaluate a firm's performance and apply into a particular case of comparing performance of Coca Cola and Pepsi based on the past and forecasted data. 1.Definitions of EVA and its strengths and limitations Economic value added (EVA) has been getting plenty of attention in recent years as a new form of performance measurement. An increasing number of companies are relying heavily upon EVA...4,339 Words  14 Pages

Week 4 Team paper Caledonia Products Integrative Problem FIN/370 April 7, 2014 Christine Gordon Caledonia Products Integrative Problem Caledonia Products recently acquired a new financial analyst assistant. Before “unleashing” the new assistant into a solo position Caledonia Products has set a huge task. The new assistant has to take under consideration a new investment, of creating and distributing a new product. The new project would last five years and cost a total of $1,000,000 over the...1,100 Words  8 Pages

Calculating Beta for Compuware Co.Calculating Beta for Compuware Corporation Financial websites tend to calculate beta on securities differently for publicly traded companies. Beta is merely an estimable measure of an assets’ risk in relation to the market. Because each website has their own underlying assumptions, they compute beta to have different values. In some cases, the variance in beta is as large as 0.50. To find out what underlying assumptions websites used to compute their betas, we performed a series of...908 Words  3 Pages

Shui Fabrics  504 WordsKATLIN ANN M. FERNANDEZ SHUI FABRICS DEFINE THE PROBLEM IN THE CASE Shui Fabrics is a joint venture business between an American Company, Rocky River Industries and Shanghai Fabric Ltd. from China. The goal of the company is to produce dye and coat fabric to sell to China and international sportswear manufacturers.The problem in this case is that Ray Betzell, the general manager of a joint venture between Rocky River Industries and Shanghai fabrics is torn between two companies. The...504 Words  2 Pages

HBR Case Study  5548 WordsReturns and Standard Deviations of Local Markets Examining whether or not diversifying your domestic portfolio with international investments is a question that has been posed since true financial globalization began in the latter part of the 20th century. In this case we were presented with a situation where a large investor voiced his concerns with his investment expert about investing in foreign financial instruments. The client was concerned with investing abroad when the home markets...5,548 Words  33 Pages

Marriott Case Study  2588 Words1. Are the four components of Marriott’s Financial Strategy consistent with its growth objective? Marriott's sales grew up by 24% and its return on equity stood at 22% in the year 1987, the sales and earnings per share has doubled over the previous year as stated in the case study. The company operates in three divisions: lodging, contract services and restaurants which represents 41%, 46% and 13% of sales in 1987 respectively. Marriott is determined to develop and to enhance its position in...2,588 Words  9 Pages

mgx1991  761 WordsI have clarified the last question in the case for chapter 7. This doesn't change the question, but rather clarifies the intent of the question. The question asks for you to comment on how Dan could have done a better job based on the behavioral guidelines for the collaborative approach. You will find these guidelines at the end of the chapter, and these guidelines deal with the roles of initiator, responder, and mediator. I have rewritten to question below to clarify the intent of...761 Words  3 Pages

Bus 630 Week 5FedEx Corporation Complete the following exercise (Research and Application 1130) and submit to your instructor. The questions in this exercise are based on FedEx Corporation. To answer the questions you will need to download FedEx’s Form 10K for the fiscal year ended May 31, 2005 (file date July 14, 2005). You do not need to print this document to answer the questions. Required: • What is FedEx’s strategy for success in the marketplace? Does the company rely primarily on a customer...304 Words  1 Page

Wayside Case  2839 WordsWAYSIDE INN INC CASE STUDY 2. Company Analysis Wayside Inns was formed in 1980 as the successor to United Motels Enterprises, a company that operated several franchised motels under licensing agreements from two national chains. Wayside has been experiencing brisk business and is currently operating at near full capacity. To capture more business Wayside is considering a 40room expansion for the motel. We shall evaluate the company using a SWOT analysis. Threats  Competitors are...2,839 Words  8 Pages

Ameritrade Case Study  661 WordsWhen choosing our risk free rate, we decided to base it off of the assumption that the project would last 510 years. The 5 year bond yield is 6.22% and for 10 years 6.34% (Exhibit 3) which averages out to a risk free rate of 6.28%. Prevailing Yields on U.S. Government Securities (August 31, 1997)   Annualized Yield to Maturity      3Month TBills  5.24%   1Year Bonds  5.59%   5Year Bonds  6.22%   10Year Bonds  6.34%   20Year Bonds  6.69% ...661 Words  3 Pages

Economic Value Added of Acc(Cement Company)MCS Assignment on Calculation of EVA for ACC Company {draw:frame} Group members: *Company Profile*: The corporate and registered offices are at Cement House, Mumbai. The company has two subsidiaries namely Bulk Cement Corporation India which caters to bulk cement requirements and ACC Machinery Company which manufactures machinery and equipment for use in chemicals and cement industries. It has associations with Yanbu Cement Company, Saudi Arabia for operating and managing their...1,113 Words  4 Pages

Cost of Capital at Ameritrade  1067 WordsCase Solution Cost of Capital at Ameritrade   • Executive summary: Formed in 1971 and listed in March 1997, Ameritrade has been one of the most successful players in the deep discount brokerage sector. Ameritrade’s two major sources of revenue, Transaction income (brokerage commissions, clearing fees, and payment for order flow) and Net interest revenues that were generated from net...1,067 Words  5 Pages

Teletech Case  1193 WordsBackground The Teletech Corporation operated in two business segments: Telecommunications Services (TS), and Products and Systems (P&S). Though Teletech was a dominant service provider in the area, the company has been experiencing a downtrend of earning growth and stock prices due to keener competition and worse performance in certain segment. Problems statement Teletech has been using economic profit as a measure of value creation at the segment and businessunit level and net present...1,193 Words  5 Pages

Amitrade: a Problem Excercise of Cost of CapitalMBA 203: Problem Set 4 Cost of Capital at Ameritrade Due: Wednesday, November 28, 2012, by 9:00 a.m. The course material covered in weeks 4 and 5 should be suﬃcient for doing this problem set. The questions below are for the Cost of Capital at Ameritrade case in your course packet. You can ﬁnd the data for this case on the course website in a spreadsheet named Ameritrade.xls. Please turn in your problem set solutions by posting them to bSpace as an Excel ﬁle or pdf ﬁle. Upload a single...748 Words  4 Pages

Roi in Talent Management  7410 WordsReturn on Investment in Talent Management: Measures You Can Put to Work Right Now A Human Capital Institute Position Paper  September, 2004 Sponsored by By David Creelman Return on Investment in Talent Management 1 Return on Investment in Talent Management: Measures You Can Put to Work Right Now Key Points: 1. Attempts to put a dollar value on “human capital”, the way we would do for items like inventory, have not been successful. 2. There are good, proven, practical measures like...7,410 Words  22 Pages

Philip Anderson  593 Words1. Which of the investment alternative: Provides the highest returns to the client? Provides the highest profits to Stuart&Co.? In order to find the right result for each question, I suppose the client of each situation will invest $10,000. I will make a lot of calculations to support my opinion. The process listed as Exhibit1, Exhibit2 and Exhibit 3. Both Alternative A and C will provide the highest returns to the client depending on the period of investment. In this case, A has the highest...593 Words  2 Pages

Shui Fabrics  963 WordsShui Fabrics: Critical Analysis of a Global Problem Introduction Shui Fabrics is a China based fabric company that is a 50%50% joint venture between a Chinese company and U.S. Textile manufacturer. At present, it produces dye and coat fabric for both domestic as well as international market. There will be a discussion of differences between American and Chinese perspectives on Shui Fabrics' ROI by using the Global project dimensions. Along with this, a strategy will be also discussed to...963 Words  3 Pages

Stanhope Project  1020 WordsAutomotive Builders, Inc.: The Stanhope Project Saad Ahmed Benjamin Baer Alket Koci James Sanchez Overview ABI started as the Farm Equipment Company after World War I. The company began using diesel engine parts for their tractors. The company saw progressive growth and became a multimilliondollar company by 1940. During World War II the company became a producer tanks and trucks for the military. Once the war was completed the company began to establish itself as a producer...1,020 Words  4 Pages

Name Tung Son Bold letters Name: Tung Son Nguyen ID: 1418366 (Bold letters below are my answers) FIN 3331 – Risk & Return Assignment 1. You are given the following probability distribution of returns for stock J: A probability of .2 that the return will be 12%; a probability of .35 that the return will be 18%; a probability of .3 that the return will be 10%; and a probability of .15 that the return will be 10%. What is the expected return of this stock? What is the standard deviation rounded to the nearest...597 Words  4 Pages

Kirk Patrick Model  1103 WordsKirkpatrickPhilips Model Knowing there is a definitive need to measure the impacts of a large corporate cost like learning it is fitting to have an industry acceptable model for doing so. This model is actually one that has been in existence since the 1950’s but continues to be accepted today using technology and creativity to maximize its benefits for the modern corporation. In 1959, Donald L. Kirkpatrick, PhD, published a series of four articles called “Techniques for Evaluating Training...1,103 Words  6 Pages

fin week 5 assignmentQuestion 1 Your finance text book sold 53,250 copies in its first year. The publishing company expects the sales to grow at a rate of 20 percent for the next three years, and by 10 percent in the fourth year. Calculate the total number of copies that the publisher expects to sell in year 3 and 4. (If you solve this problem with algebra round intermediate calculations to 6 decimal places, in all cases round your final answers to the nearest whole number.) Number of copies sold after 3 years...563 Words  4 Pages

Time Value of Money and Risk AnalysisAnnuities # 2 Time Value of Money (TVM) Understanding how the time value of money works can be most easily explained by taking your initial investment let us say $10 by the end of year five it could be worth $100. This means you have earned $90 in the last five years. Next year, you invest $10 and at the end of year five it is worth $80 because interest has not accumulated on the time that was lost between year 1 and year 2. My example of this is that my fiancé put $3000 in each of...735 Words  3 Pages

Investments  3123 Words Economics 101 Summer 2008 Independent Learning @ WLC Instructor: Dr Jack Kapoor Assignment #4 Individual Investment Plan Dawn M Russo To begin assignment four, I created three longterm financial goals: 1. Emergency Fund: 6 months to 1 year of gross income. 2. College Funding: Two children, ages 6 and 11 years old. 3. Retirement Plan: Including provisions for the possible Social Security program...3,123 Words  15 Pages

Financial Markets  347 WordsJason Hurley FINA 3144, Dr. Glegg Financial Markets Excel Project Part 1: 1. The bond prices are all different due to the coupon payments and the years left to maturity all being different for each bond. Since each bond’s coupon rate is different, it has a direct effect on the coupon payments for each bond, which makes each bond price different. 2. The duration for each bond tells you what is the total percentage increase or decrease each year for the weighted values of each...347 Words  2 Pages

Case Analysis: Marriott CorporationFinancial Decision Making Final Project Case analysis: Marriott Corporation Introduction and background The Marriott Corporation, an American firm, was founded in 1927 by J.Willard Marriot.The company began as a small beer stand and soon began to sell food and provided lodging that expanded rapidly. With the help of his wife Alice, the family owned business had 45 restaurants in nine states by 1940 and grew into one of the leading service companies. The Company has three major...3,052 Words  15 Pages

Finance Report ASOS ESSAYRatio analysis The ratios for years 20082012 are divided into the following groups: profitability, liquidity, gearing, employees and growth rates. Profitability ratios ROCE ROCE started with a pleasing increase of 12.32% in 2009, however began to fall; decreasing by 32.14% from 2009 to 2011. Finally in 2012 the ratio increased again by 10.7%. The target ROCE is often 1530%, so ASOS exceed the target return rate every year, with exception of 2011 (France, 2013). ASOS therefore shouldn’t have...669 Words  2 Pages

Efficient Frontier Analysis  1047 WordsThe definition of the efficient frontier says that “the efficient frontier represents the set of portfolios that has the maximum rate of return for every given level of risk, or the minimum risk for every level of return.” I plotted standard deviation on x axes and Returns on y axes to interpret efficient frontier. Exhibits also include these and the graphs you asked for as graph2: In our study, we concentrated on the optimal portfolios, the one which has the lowest volatility or risk, for...1,047 Words  3 Pages

Performance of Brac Bank Ltd.Chapter 5: Performance Evaluation To evaluate the performance of BRAC bank Limited the following parameters are considered in the next part of the paper. 1. Asset 2. Deposit 3. Investment 4. Operating Profit 5. Capital Adequacy 6. Loans & Advance 7. Nonfunded Income 8. Revenue per Employee 9. Operating Cost per Employee 10. Cost to Income Ratio 11. Operating Cost as a Percentage of Loans and Advances 12. Fund Management 13. Earning Per Share...2,337 Words  8 Pages

Ameritrade – Cost of Capital  2466 WordsGroup Case 1: Ameritrade – Cost of Capital Executive Summary: As a deepdiscount brokerage, Ameritrade planned to improve its competitive position by price cutting, technology enhancements, and increased advertising in mid1997. Before initiating the plan, Ameritrade needed know whether the investment returned more than it cost. We were hired to estimate the cost of capital correctly. The key question is to find suitable comparable firms to estimate Ameritrade’s asset beta, since it was a...2,466 Words  7 Pages

Waltz on the Danube  4982 WordsWaltz on the Danube Executive Summary The purpose of this case is to establish the viability of the 75 million shopping center project located along the Danube River in the city of Gyor. As the director of Hungarian operations for ECE Projektmanagement Dr. Philipp von Wilmowsky had worked for two years on the 30,300 square meter shopping center. So while Gyor lack significant a shopping center thus creating a site that had great potential there were several major questions that would...4,982 Words  14 Pages

Journal About the ValueAdded Management as a Control SystemVALUEBASED MANAGEMENT CONTROL PROCESSES TO CREATE VALUE THROUGH INTEGRATION A LITERATURE REVIEW ANNE AMEELS email: [email protected] PROF. DR. WERNER BRUGGEMAN email: [email protected] GEERT SCHEIPERS email: [email protected] D/2002/6482/18 VALUEBASED MANAGEMENT: AN INTEGRATED APPROACH TO VALUE CREATION A LITERATURE REVIEW ANNE AMEELS email: [email protected] PROF. DR. WERNER BRUGGEMAN email: [email protected] GEERT SCHEIPERS email:...27,250 Words  84 Pages

Roi Example  293 WordsDefinition of 'Return On Investment  ROI' A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. To calculate ROI, the benefit (return) of an investment is divided by the cost of the investment; the result is expressed as a percentage or a ratio. The return on investment formula: In the above formula "gains from investment", refers to the proceeds obtained from selling the investment of interest....293 Words  1 Page

past paper  1494 WordsTHE UNIVERSITY OF HULL The Business School HKU SPACE Level 6 Examination 1 August 2010 Current Issues in Finance Date : 1 August 2010 Time Allowed : 2 hours Answer THREE questions – At least ONE question from each section. Standard calculators (nonprogrammable) may be used. Tables are attached. Do not open or turn over this exam paper, or start to write anything until told to by the Invigilator. Starting to write before permitted to do so may be seen as an attempt to...1,494 Words  58 Pages

Project Juniper  640 WordsProject Management email OPS 571 September 10, 2014 Project Management email This is in response to your email that I received of you asking whether or not if you should invest into Project: Juniper. Even though, the critical path shows that it will only take six months to complete the project from beginning to the end. Upon further evaluation and taking into consideration that your return on investment would not be anywhere near to the point of your initial investment....640 Words  2 Pages

Fall Homework  889 WordsShow your work. The first 7 questions are worth 5 points each. 1. Which form of the efficient market hypothesis implies that security prices reflect all information contained in past prices? Weak 2. Holden Bicycles has 1,000 shares outstanding each with a par value of $0.10 each. If they are sold to shareholders at $19 each, what would the capital surplus be? $18,900 3. You own 1,000 shares of a stock. You can cast your 1,000 votes for a single director. What kind of voting does the...889 Words  4 Pages

Cost of Capital at Ameritrade  1337 WordsCase Study of Cost of Capital at Ameritrade 1a How can the CAPM be used to estimate the cost of capital for a real business investment decision? CAPM results can be compared to the best expected rate of return that investor can possibly earn in other investments with similar risks, which is the cost of capital. Under the CAPM, the market portfolio is a welldiversified, efficient portfolio representing the nondiversifiable risk in the economy. Therefore, investments have similar risk if...1,337 Words  4 Pages

Example Accounting Report  458 WordsReport prepared for Peter Sharpe Prepared on 1 June 2012 This report is made to provide suggestions to Peter Sharpe about the local Redcliffe gift shop and whether he should invest into it or not by using the following financial ratios: Gross Profit, Net Profit and Rate of Return on Owner’s Equity. The Gross Profit Ratio tells the business the relationship between gross profit and sales and the amount is used to cover the operating costs of the business. This ratio is calculated by finding...458 Words  2 Pages

Abcnnnnnnn  8121 WordsSOCIALLY RESPONSIBLE INVESTMENT: IS IT PROFITABLE?∗ PHOEBUS J. DHRYMES Columbia University July 1997; revised June 1998 1 What is Socially Responsible? Before we can answer the question we posed in the title, we need to deﬁne just what is “socially” responsible. Evidently, the meaning varies with time and place, since social responsibility is deﬁned by a group’s cultural and ethical values. For example in the middle ages lending with interest was not considered ethical, let alone...8,121 Words  22 Pages

wk5 problem set  338 WordsWk5 problem set Problem 5.17 Growth rate: Your finance textbook sold 53,250 copies in its first year. The publishing company expects the sales to grow at a rate of 20 percent each year for the next three years and by 10 percent in the fourth year. Calculate the total number of copies that the publisher expects to sell in years 3 and 4. Draw a time line to show the sales level for each of the next four years. 1) 53250 x 1.20 = 2) 1st Year = 63900 x 1.20 = 3) 2nd year = 76680 x 1.20 =...338 Words  2 Pages