Question

In: Finance

Mr Shikongo, a retiree with a farm in dordabis has received N$ 1,000,000 in pensions for...

Mr Shikongo, a retiree with a farm in dordabis has received N$ 1,000,000 in pensions for his long service as a public servant. he is considering investing in farming but does not want to 'put all eggs in one basket'. Mr shikongo is therefore planning to invest in pig farming, crop farming, and floriculture. likely returns from each investment depend on the state of weather. Namibia's department of Meteorology's weather forecasts for the outlook year are uncertain and are projected as per the table below. The likely returns from each venture, also depending on state of weather, are also given in the table:

State of weather

probability of state of

weather

 pig farming crop farming floriculture
bad 20% 2% -3% -5%
good ?% 10% 7% 11%
excellent 30% 20% 15% 25%
investment (N$) N$ 300,000 N$ 250,000 N$ 450,000

Required:

a. calculate the farmer's likely return on the floriculture investment.

b. what is the risk of the pig farming project?

c. what is the farmer's likely combined return if he invests in the three farming activities as shown in the table?

d. what is the risk on the farmer's portfolio?

Solutions

Expert Solution

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

Anthrax is a fatal, contagious disease that affects farm animals and humans. This disease has received...
Anthrax is a fatal, contagious disease that affects farm animals and humans. This disease has received a lot of media attention because it’s one of several that can be used as biological warfare agents. To learn more about this disease, scientists at the Biological Warfare Research Center at Fort Dietrich, Maryland set up the following experiment: One herd of 100 cows was injected with liquid containing anthrax bacteria that had been heated enough to weaken, but not kill the bacteria....
What is the present value of $1,000,000 to be received in 15 years, if the opportunity...
What is the present value of $1,000,000 to be received in 15 years, if the opportunity cost is 3.50% annually?
4. What is the present value of $1,000,000 to be received in 35 years if the...
4. What is the present value of $1,000,000 to be received in 35 years if the average rate of interest over the 35 years is 2.5%? Interpret your result. Make sure to show your work.
You received a high-yield savings account that contains $1,000,000. The account has a 7% annual interest...
You received a high-yield savings account that contains $1,000,000. The account has a 7% annual interest rate and you want to take out a constant amount every year for 40 years. 1. How much would you be able to withdraw every year? Hint: the annual interest rate should be used as the discount rate in the finite time annuity formula. 2. Using Microsoft Excel, decompose your annual withdrawals into interest revenue and revenue earned from principal deduction (for example, at...
Mr. Carter is the manager of Simmons Farm and Seed Company, a wholesaler of fertilizer, seed,...
Mr. Carter is the manager of Simmons Farm and Seed Company, a wholesaler of fertilizer, seed, and other farm supplies. The company has been successful in recent years primarily because of great customer service— flexible credit terms, customized orders (quantities, seed mix, etc.), and on-time delivery, among others. Global Agricultural Products, Inc., Simmons' parent corporation, has informed Mr. Carter that his budgeted net income for the coming year will be $120,000. The budget was based on data for the prior...
Mr. Carter is the manager of Simmons Farm and Seed Company, a wholesaler of fertilizer, seed,...
Mr. Carter is the manager of Simmons Farm and Seed Company, a wholesaler of fertilizer, seed, and other farm supplies. The company has been successful in recent years primarily because of great customer service— flexible credit terms, customized orders (quantities, seed mix, etc.), and on-time delivery, among others. Global Agricultural Products, Inc., Simmons' parent corporation, has informed Mr. Carter that his budgeted net income for the coming year will be $120,000. The budget was based on data for the prior...
The weights of ripe watermelons grown at Mr. Smith's farm are normally distributed with a standard...
The weights of ripe watermelons grown at Mr. Smith's farm are normally distributed with a standard deviation of 2.7 lb. Find the mean weight of Mr. Smith's ripe watermelons if only 9% weigh less than 12 lb. (Give your answer correct to one decimal place.)
Mr. Heyden, 72, is brought to the emergency room after an accident at his farm. The...
Mr. Heyden, 72, is brought to the emergency room after an accident at his farm. The paramedics report that his left side was pinned beneath his tractor, and that when he was freed, his left lower quadrant appeared to be compressed. His blood pressure is 90/50 mm Hg and falling, and his heart rate is 116 beats/min. His pulse is thready. Mr. Heyden complains of pain in his left side and then loses consciousness. 1. Mr. Heyden's low blood pressure...
You are the chief of police and received the news that you must cut 1,000,000 out...
You are the chief of police and received the news that you must cut 1,000,000 out of your 5,000,000 budget. Tell me how would you go about making the cut and which items would be on the chopping block and why?
Mr. Pitkin bought a farm and promised to pay $6825 in 6 years with 7% simple...
Mr. Pitkin bought a farm and promised to pay $6825 in 6 years with 7% simple interest and $10925 in 14 years with 10.75% simple interest. Later, Mr. Pitkin met with the lender requesting to pay $6875 at the end of 4 years and to make a final payment at the end of 11 years. Based on a simple interest rate of 17.5%, determine the amount required to settle the debt at the end of 11 years. $
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT