Question

In: Finance

capital investment by firms should offer rates of return 1.of at least 10% , 2.at least...

capital investment by firms should offer rates of return
1.of at least 10% ,
2.at least equal to the 3 month treasury bill return,
3.of at least 20%,
4.at least as high as those available in financial 5
markets at the same level of risk,
5.at least as high as the return on the market



Solutions

Expert Solution

Answer: [4] at least as high as those available in financial markets at the same level of risk.

Explanation:

Required return is what would be received, if the investment is made in alternatives having the same risk.


Related Solutions

QUESTION 1 Based on historical date, the expected rates of return to investing in venture capital...
QUESTION 1 Based on historical date, the expected rates of return to investing in venture capital funds are much higher than the rates of return from investing in the public stock market A. True B. False C. Uncertain 1 points    QUESTION 2 An important factor in explaining the returns to investing in venture capital is timing. Funds started in some years do much better than funds started in other years. True False 1 points    QUESTION 3 Since investors...
1. Give an example of a qualitative factor that should be considered in a capital investment...
1. Give an example of a qualitative factor that should be considered in a capital investment analysis related to acquiring automated factory equipment. 2. What are the major disadvantages of leasing a fixed asset rather than purchasing it? Discuss the principle limitations of the cash payback method for evaluating capital investment proposals.
Rates of Return The minimum acceptable rate of return (MARR) for any investment is nearly always...
Rates of Return The minimum acceptable rate of return (MARR) for any investment is nearly always greater than the bank interest rate, because of risk and other factors. List at least four such factors you might encounter to justify that higher rate for the money you invest. (b) Cash Flow Diagrams You need to decide whether to buy or lease a car. All the following values are in present $ so you do not need to adjust for the time...
Briefly discuss why stocks with low and negative betas offer such low rates of return when...
Briefly discuss why stocks with low and negative betas offer such low rates of return when stocks are said to be risky in general.
Data for Uberto Company are presented in the following table of rates of return on investment...
Data for Uberto Company are presented in the following table of rates of return on investment and residual incomes: Invested Assets Income from Operations Rate of Return on Investment Minimum Rate of Return Minimum Acceptable Income from Operations Residual Income $860,000 $215,000 (a) 14% (b) (c) $610,000 (d) (e) (f) $67,100 $30,500 $380,000 (g) 14% (h) $41,800 (i) $290,000 $60,900 (j) 13% (k) (l) Determine the missing values, identifying each item by the appropriate letter. a. % b. $ c....
An investment company knows that the rates of return on its portfolios have a mean of...
An investment company knows that the rates of return on its portfolios have a mean of 7.45 percent, with a standard deviation of 3.82 percent. The company selects a sample of 144 portfolios to analyze. Assume the company has tens of thousands of portfolios. (Careful- "percent" is just a unit here!) You do NOT need to check CLT here. A. What is the probability that the mean of the sample is smaller than 7 percent? B. What is the probability...
Find the rates of return to do the following: A.) Double an investment in 4 years,...
Find the rates of return to do the following: A.) Double an investment in 4 years, B.) double the investment in 10 years, C.) triple an investment in 4 years, triple an investment in 10 years
Suppose the yield curve shows 1 year rates at 5%, 2 year rates at 10% and...
Suppose the yield curve shows 1 year rates at 5%, 2 year rates at 10% and 3 year rates at 15%. What is the price of a bond with a $1000 par value, maturity 3 years, and annual coupon payment of $50? Show work for credit.
Critique Internal Rate of Return and compare to Return on Assets, Investment, Capital, and defend best...
Critique Internal Rate of Return and compare to Return on Assets, Investment, Capital, and defend best practice in assessing overall financial performance.
Suppose that firms decide to increase their investment in physical capital. Use the model of the...
Suppose that firms decide to increase their investment in physical capital. Use the model of the market for loanable funds in an open economy to answer the following questions. Be sure to use the appropriate graphs to illustrate the answer. a) What happens to the quantities of national savings, private savings, and public savings? b) What happens to the real interest rate, the quantity of investment, and the quantity of net capital outflows? c) What happens to the real exchange...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT