• Project Management the Managerial Process Ch 2
    | |Year 0 | Since the NPV is positive, accept project. 4. You work for the 3T company, which expects to earn at least 18 percent on its investments. You have to choose between two similar projects. Your analysts predict...
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  • Hw Solution Ch1-6
    | |Year 0 | Since the NPV is positive, accept project. 4. You work for the 3T company, which expects to earn at least 18 percent on its investments. You have to choose between two similar projects. Your analysts predict...
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  • HW Solution C1-7
    at least 18 percent on its investments. You have to choose between two similar projects. Your analysts predict that inflation rate will be a stable 3 percent over the next 7 years. Below is the cash flow information for each project. Which of the two projects would you fund if the decision is...
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  • Tm Ch02 Organization Strategy
    | |Year 0 | Since the NPV is positive, accept project. 4. You work for the 3T company, which expects to earn at least 18 percent on its investments. You have to choose between two similar projects...
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  • Introduction to Corporate Finance
    by the state in which you live, opportunities exist to sell the claim today for an immediate lump-sum cash payment. a. What is the least you will sell your claim for if you could earn the following rates of return on similar risk investments during the ten-year period? 1. 6 percent 2. 9 percent 3...
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  • Financial Modeling
    you can borrow all of the money you need for a project at 6 per­ cent, the cost of capital for this project is 6 percent. 2 . Your company's weighted-average cost of capital is 1 1 percent. You believe the company should make a particular investment, but its in­ ternal rate of return is only 9...
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  • Citibank - Basics of corporate finance
    present value. Example two: solve for required rate of return Suppose that you buy a share of stock in a company for $50, which you know is the appropriate price for the stock. The next dividend will be $2, and you expect that the dividend will grow at a 10% annual rate. What is your required...
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  • Citibank Basis of Corporate Finance
    = 0.1556 or 15.56% Given the expected inflation rate of 8%, the investor should invest at a 15.56% nominal rate to earn a 7% real rate on the investment. In the Practice Exercise that follows, you will have an opportunity to practice what you have learned about calculating effective interest rates...
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  • Later
    that when you can earn more interest, you need less of your own money to reach the same future dollar amount. They can also base their answer on the present value formula. 52. You are considering two separate investments. Both investments pay 7 percent interest. Investment A pays simple interest...
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  • Investment Analysis and Portfolio Management 7th Edition
    should have the highest growth rate of earnings. REFERENCES 405 14. You have been reading about the Maddy Computer Company (MCC), which currently retains 90 percent of its earnings ($5 a share this year). It earns an ROE of almost 30 percent. Assuming a required rate of return of 14...
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  • Mckinsey Valuation
    . Ideally, the ROIC each year would equal the internal rate of return on the investment. Using the classic IRR formula, you would find that Company R earns an average ROIC of 15 percent over the life of the restaurant. To correct for this discrepancy, you could mimic the IRR by employing an approach...
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  • Chapter 1 Economics
    have a constant growth rate of 7% per year. The risk free rate of return is 6%, the market risk premium is 8%, and the beta for this company is 1.0. The stock price is a. $42.86 b. $18.34 c. $17.14 d. $40.05 e. none of the above 13. Xila expects to earn $4.00 per share next year...
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  • Valuation
    company in five years will be $32 per share, if you perform exactly as anticipated, expectations beyond five years do not change, and investors continue to expect a 10 percent return from alternative investments. Assume that you have not paid any dividends. So an investor who bought stock for $20 per...
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  • Fundamentals of Corporate Finance
    it is 5 percent? b. Suppose that you demand a real rate of interest of 3 percent on your investments. What nominal interest rate do you need to earn if the inflation rate is zero? If it is 5 percent? Here is a useful approximation. The real rate approximately equals the difference between the...
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  • Review Questions Company Valuation
    tight range between 7 and 11 percent, except during the years between 2005 and 2008 7. Which industry tend to have high median ROIC. What are the characteristics of this group of companies? Pharmaceuticals and biotechnology companies tend to have the highest median ROIC due to patent protected...
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  • Corporate Finance
    interest of 3 percent on your investments. What nominal interest rate do you need to earn if the inflation rate is zero? If it is 5 percent? Here is a useful approximation. The real rate approximately equals the difference between the nominal rate and the inflation rate:6 Real interest rate...
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  • Econometrics
    first payment starting today. The interest rate at your bank is 7 percent per year compounded annually. Which option has the greater present value? (Ignore any tax differences between the two options.) Solution: To compare the two options, find the present value of each at time t = 0 and choose the one...
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  • Finance
    of these investments have positive NPVs? Which would you advise Norman to take? 8. Show that your answers to Practice Question 7 are consistent with the rate of return rule for investment decisions. 9. Take another look at investment opportunity (d) in Practice Question 7. Suppose a bank offers...
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  • Essays
    years do not change, and investors continue to expect a 10 percent return from alternative investments. Assume that you have not paid any dividends. So an investor who bought stock for $20 per share today could sell the share for $32 in five years. The annualized return would be 10 percent...
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  • Fundamentals of Finance Management
    rate of return on the highest-yielding security? Your personal tax rate is 36 percent. You can invest in either corporate bonds that yield 9 percent or municipal bonds (of equal risk) that yield 7 percent. Which investment should you choose? (Ignore state income taxes.) The Klaven Corporation has...
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