6.8. A stock price is currently $40. Over each of the next two three-month periods it is expected to go up by 10% or down by 10%. The risk-free interest rate is 12% per annum with continuous compounding. a. What is the value of a six-month European put option with a strike price of $42? b. What is the value of a six-month American put option with a strike price of $42?
In: Finance
A company is considering two mutually exclusive expansion plans. Plan A requires a $40 million expenditure on a large-scale integrated plant that would provide expected cash flows of $6.39 million per year for 20 years. Plan B requires a $13 million expenditure to build a somewhat less efficient, more labor-intensive plant with an expected cash flow of $2.91 million per year for 20 years. The firm's WACC is 9%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below.
Calculate each project's NPV. Round your answers to two decimal places. Do not round your intermediate calculations. Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55.
Plan A: $ million
Plan B: $ million
Calculate each project's IRR. Round your answer to two decimal places.
Plan A: %
Plan B: %
By graphing the NPV profiles for Plan A and Plan B, approximate the crossover rate to the nearest percent.
%
Calculate the crossover rate where the two projects' NPVs are equal. Round your answer to two decimal places.
%
Why is NPV better than IRR for making capital budgeting decisions that add to shareholder value? The input in the box below will not be graded, but may be reviewed and considered by your instructor.
In: Finance
A company is considering two mutually exclusive expansion plans. Plan A requires a $40 million expenditure on a large-scale integrated plant that would provide expected cash flows of $6.39 million per year for 20 years. Plan B requires a $15 million expenditure to build a somewhat less efficient, more labor-intensive plant with an expected cash flow of $3.36 million per year for 20 years. The firm's WACC is 11%.
Calculate each project's NPV. Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Do not round intermediate calculations. Round your answers to two decimal places.
Plan A: $ million
Plan B: $ million
Calculate each project's IRR. Round your answers to one decimal place.
Plan A: %
Plan B: %
In: Finance
A company is considering two mutually exclusive expansion plans. Plan A requires a $40 million expenditure on a large-scale integrated plant that would provide expected cash flows of $6.39 million per year for 20 years. Plan B requires a $12 million expenditure to build a somewhat less efficient, more labor-intensive plant with an expected cash flow of $2.69 million per year for 20 years. The firm's WACC is 10%.
Calculate each project's NPV. Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Do not round intermediate calculations. Round your answers to two decimal places.
Plan A: $ million
Plan B: $ million
Calculate each project's IRR. Round your answers to one decimal place.
Plan A: %
Plan B: %
In: Finance
eBook A company is considering two mutually exclusive expansion plans. Plan A requires a $40 million expenditure on a large-scale integrated plant that would provide expected cash flows of $6.39 million per year for 20 years. Plan B requires a $11 million expenditure to build a somewhat less efficient, more labor-intensive plant with an expected cash flow of $2.47 million per year for 20 years. The firm's WACC is 10%.
Calculate each project's NPV. Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Do not round intermediate calculations. Round your answers to two decimal places.
Calculate each project's IRR. Round your answers to one decimal place.
By graphing the NPV profiles for Plan A and Plan B, determine the crossover rate. Round your answer to the nearest whole number.
Calculate the crossover rate where the two projects' NPVs are equal. Round your answer to one decimal place.
Is NPV better than IRR for making capital budgeting decisions that add to shareholder value?
In: Finance
A company is considering two mutually exclusive expansion plans. Plan A requires a $40 million expenditure on a large-scale integrated plant that would provide expected cash flows of $6.39 million per year for 20 years. Plan B requires a $15 million expenditure to build a somewhat less efficient, more labor-intensive plant with an expected cash flow of $3.36 million per year for 20 years. The firm's WACC is 10%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below.
Calculate each project's NPV. Round your answers to two decimal places. Do not round your intermediate calculations. Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55.
Plan A: $ million
Plan B: $ million
Calculate each project's IRR. Round your answer to two decimal places.
Plan A: %
Plan B: %
By graphing the NPV profiles for Plan A and Plan B, approximate the crossover rate to the nearest percent.
%
Calculate the crossover rate where the two projects' NPVs are equal. Round your answer to two decimal places.
%
Why is NPV better than IRR for making capital budgeting decisions that add to shareholder value? The input in the box below will not be graded, but may be reviewed and considered by your instructor.
In: Finance
A company is considering two mutually exclusive expansion plans. Plan A requires a $40 million expenditure on a large-scale integrated plant that would provide expected cash flows of $6.39 million per year for 20 years. Plan B requires a $11 million expenditure to build a somewhat less efficient, more labor-intensive plant with an expected cash flow of $2.47 million per year for 20 years. The firm's WACC is 11%.
a. Calculate each project's NPV. Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Do not round intermediate calculations. Round your answers to two decimal places.
Plan A: $ million
Plan B: $ million
Calculate each project's IRR. Round your answers to one decimal place.
Plan A: %
Plan B: %
b. By graphing the NPV profiles for Plan A and Plan B, determine the crossover rate. Round your answer to the nearest whole number.
%
c. Calculate the crossover rate where the two projects' NPVs are equal. Round your answer to one decimal place.
%
In: Finance
Two converging lenses with focal lengths of 40 cmand 20 cm are 10 cm apart. A 2.0 cm -tall object is 15 cm in front of the 40 cm -focal-length lens.
Calculate the image position and image height.
Please show work, thanks-
In: Physics
Two limestones (LS1 and LS2) have LoI (loss on ignition) values as 40% and 33%, respectively. a) Calculate the total amount (%) of impurities in these limestones; b) State which of the quicklimes obtained from these limestones slakes faster.
In: Civil Engineering
Production Budget
Flashkick Company Manufactures and sells soccer balls for teams of children in elementary and high school. Flashkick's best selling lines are the practice ball line (durable soccer balls for training and practice) and the match ball line (high-performance soccer balls used in games). In the first four months of next year, Flashkick expects to sell the following:
___________Practice Balls_______________________Match Balls
_________Units_________selling price________units________selling price
January ___50,000_________$8.75__________7000___________$16.00
February___58000_________$8.75__________8000___________$16.00
March _____70000_________$8.75_________12000___________$16.00
April______100000_________$8.75_________18000___________$16.00
Flashkick requires ending inventory of product to equal 20 percent of the next month's unit sales. Beginning inventory in January was 3,300 practice soccer balls and 400 match soccer balls.
Required
Construct a production budget for each of the two product lines for Flashkick Company for the first three months of the coming year.
Production budget for practice balls
Flashkick Company
Production Budget - Practice balls
For the first quarter of next year
_________________January______________February__________________March
unit sales____________?__________________?_______________________?
desired ending inventory__?_______________?________________________?
total needed__________?_________________?________________________?
Less: Beginning inventory____?____________?________________________?
unit produced______________?___________?_________________________?
Production budget for match balls:
Flashkick Company
Production Budget - Match Balls
_______________January___________February_______________March
unit sales________?__________________?_____________________?
desired ending inventory___?___________?_____________________?
Total needed_____?__________________?_____________________?
Less: Beginninng inventory____?________?_____________________?
Units produced________?_____________?______________________?
In: Accounting