Ratio analysis is used to make relative comparisons between organizations. Given that, why might an organization’s ratios on HIT spending differ from their peers? Might those differences be a good, bad, or indifferent thing?

Greta, an elderly investor, has a degree of risk aversion of A = 3 when applied to return on wealth over a one-year horizon. She is pondering two portfolios, the S&P 500 and a hedge fund, as well as a number of one-year strategies. (All rates are annual and continuously compounded.) The S&P 500 risk premium is estimated at 8% per year, with a SD of 23%. The hedge fund risk premium is estimated at 13% with a SD of 38%. The returns on both of these portfolios in any particular year are uncorrelated with its own returns in other years. They are also uncorrelated with the returns of the other portfolio in other years. The hedge fund claims the correlation coefficient between the annual returns on the S&P 500 and the hedge fund in the same year is zero, but Greta is not fully convinced by this claim.

What should be Greta’s capital allocation? (Do not round your intermediate calculations. Round your answers to 2 decimal places.)

S&P%

hedge&

risk-free asset&

Part B. In clear terms explain why knowledge of valuation is vital in entrepreneurial finance. In your response, make sure to answer the question from the points of view of: (20 points)

1. Entrepreneurs;

2. Investors
3. Future Team Members in a venture

Part C. What are the most important things that you can do for a venture in order to get the odds of success in your favor? Explain. (10 points)

Greta, an elderly investor, has a degree of risk aversion of A = 3 when applied to return on wealth over a one-year horizon. She is pondering two portfolios, the S&P 500 and a hedge fund, as well as a number of one-year strategies. (All rates are annual and continuously compounded.) The S&P 500 risk premium is estimated at 7.2% per year, with a SD of 22.2%. The hedge fund risk premium is estimated at 12.2% with a SD of 37.2%. The returns on both of these portfolios in any particular year are uncorrelated with its own returns in other years. They are also uncorrelated with the returns of the other portfolio in other years. The hedge fund claims the correlation coefficient between the annual returns on the S&P 500 and the hedge fund in the same year is zero, but Greta is not fully convinced by this claim.

Calculate Greta’s capital allocation using an annual correlation of 0.3. (Do not round your intermediate calculations. Round your answers to 2 decimal places.)

please show all steps and formulas

Greta, an elderly investor, has a degree of risk aversion of A = 3 when applied to return on wealth over a one-year horizon. She is pondering two portfolios, the S&P 500 and a hedge fund, as well as a number of one-year strategies. (All rates are annual and continuously compounded.) The S&P 500 risk premium is estimated at 6.6% per year, with a SD of 21.6%. The hedge fund risk premium is estimated at 11.6% with a SD of 36.6%. The returns on both of these portfolios in any particular year are uncorrelated with its own returns in other years. They are also uncorrelated with the returns of the other portfolio in other years. The hedge fund claims the correlation coefficient between the annual returns on the S&P 500 and the hedge fund in the same year is zero, but Greta is not fully convinced by this claim. What should be Greta’s capital allocation? (Do not round your intermediate calculations. Round your answers to 2 decimal places.)

Part A. Outline and explain all the VARIABLES and FACTORS that determine valuation and valuation analysis of entrepreneurial ventures. Be specific in your response. (Note valuation or pricing, the topic of this questions, and evaluation, are two different subjects) (20 points)

A gym owner is considering opening a location on the other side of town. The new facility will cost $1.47 million and will be depreciated on a straight-line basis over a 20-year period. The new gym is expected to generate $559,000 in annual sales. Variable costs are 49 percent of sales, the annual fixed costs are $90,500, and the tax rate is 34 percent. What is the operating cash flow?

Multiple Choice

• $91,151

• $219,580

• $201,929

• $334,200

• $153,419

1. Why do most leases have expensive cancellation provisions? Does the existence of this provision shift risk to the lessor or to the lessee?

2. Starting in 2019 all lease obligations must show up on the balance sheet of a corporation. This is effect does away with what type of lease in accounting speak the operating lease or the capital lease?

Problem 10-08 NPVs, IRRs, and MIRRs for Independent Projects

Edelman Engineering is considering including two pieces of equipment, a truck, and an overhead pulley system, in this year's capital budget. The projects are independent. The cash outlay for the truck is $15,000 and that for the pulley system is $21,000. The firm's cost of capital is 11%. After-tax cash flows, including depreciation, are as follows:

Year Truck Pulley

1 $5,100 $7,500

2 5,100 7,500

3 5,100 7,500

4 5,100 7,500

5 5,100 7,500

a. Calculate the IRR for each project. Round your answers to two decimal places.

Truck: %

Pulley: %

b. Calculate the NPV for each project. Round your answers to the nearest dollar, if necessary. Enter each answer as a whole number. For example, do not enter 1,000,000 as 1 million.

Truck: $   
Pulley: $   

c. Calculate the MIRR for each project. Round your answers to two decimal places.

Truck:  %
Pulley:  %

Please, show step by step. Thank you.

Suppose you have set a specific goal for the balance in your savings account 12 years from today. You have been making year-end deposits of $2,000 per year for the past 8 years, and this annual deposit (if continued for 12 more years) would have been sufficient to reach your goal under the 10 percent average annual interest rate (annual compounding) that you have been receiving. However you believe that the average annual interest rate on your deposits will be only 9 percent per year compounded annually over the remaining 12 years of the investment period. If your goal remains unchanged, you must adjust your annual deposit to reflect this new interest rate. Assuming that your next deposit will be made one year from today, what must be the amount of each of the remaining 12 deposits in order to reach your original goal?

Derek plans to retire on his 65th birthday. However, he plans to work part-time until he turns 74.00. During these years of part-time work, he will neither make deposits to nor take withdrawals from his retirement account. Exactly one year after the day he turns 74.0 when he fully retires, he will wants to have $3,311,865.00 in his retirement account. He he will make contributions to his retirement account from his 26th birthday to his 65th birthday. To reach his goal, what must the contributions be? Assume a 8.00% interest rate
Answer format: Currency: Round to: 2 decimal places.

A firm will pay a dividend of $1.18 next year. The dividend is expected to grow at a constant rate of 4.93% forever and the required rate of return is 14.67%. What is the value of the stock?

Answer format: Currency: Round to: 2 decimal places.

Today is Derek’s 25th birthday. Derek has been advised that he needs to have $2,103,378.00 in his retirement account the day he turns 65. He estimates his retirement account will pay 4.00% interest. Assume he chooses not to deposit anything today. Rather he chooses to make annual deposits into the retirement account starting on his 28.00th birthday and ending on his 65th birthday. How much must those deposits be?

Answer format: Currency: Round to: 2 decimal places.

I would appreciate the help! :)

Due to a recession, expected inflation this year is only 4.75%. However, the inflation rate in Year 2 and thereafter is expected to be constant at some level above 4.75%. Assume that the expectations theory holds and the real risk-free rate (r*) is 3.5%. If the yield on 3-year Treasury bonds equals the 1-year yield plus 1.0%, what inflation rate is expected after Year 1? Round your answer to two decimal places.

Amazing Manufacturing, Inc., has been considering the purchase of a new manufacturing facility for $500,000. The facility is to be fully depreciated on a straight-line basis over seven years. It is expected to have no resale value at that time. Operating revenues from the facility are expected to be $390,000, in nominal terms, at the end of the first year. The revenues are expected to increase at the inflation rate of 4 percent. Production costs at the end of the first year will be $235,000, in nominal terms, and they are expected to increase at 5 percent per year. The real discount rate is 7 percent. The corporate tax rate is 21 percent. Calculate the NPV of the project. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)