Say you own an asset that had a total return last year of 18.5 percent. If the inflation rate last year was 3 percent, what was your real return?
In: Finance
The real risk-free rate is 2.75%. Inflation is expected to be 2.50% this year and 5.00% during the next 2 years. Assume that the maturity risk premium is zero.
What is the yield on 2-year Treasury securities? Do not round intermediate calculations. Round your answer to two decimal places.
What is the yield on 3-year Treasury securities? Do not round intermediate calculations. Round your answer to two decimal places.
In: Finance
Herman Co. is considering a four-year project that will require an initial investment of $15,000. The base-case cash flows for this project are projected to be $12,000 per year. The best-case cash flows are projected to be $20,000 per year, and the worst-case cash flows are projected to be –$1,000 per year. The company’s analysts have estimated that there is a 50% probability that the project will generate the base-case cash flows. The analysts also think that there is a 25% probability of the project generating the best-case cash flows and a 25% probability of the project generating the worst-case cash flows.
1. What would be the expected net present value (NPV) of this project if the project’s cost of capital is 14%?
$16,323
$19,588
$18,771
$17,955
Herman now wants to take into account its ability to
abandon the project at the end of year 2 if the project ends up
generating the worst-case scenario cash flows. If it decides to
abandon the project at the end of year 2, the company will receive
a one-time net cash inflow of $3,000 (at the end of year 2). The
$3,000 the company receives at the end of year 2 is the difference
between the cash the company receives from selling off the
project’s assets and the company’s –$1,000 cash outflow from
operations. Additionally, if it abandons the project, the company
will have no cash flows in years 3 and 4 of the
project.
2. Using the information in the preceding problem, find the expected NPV of this project when taking the abandonment option into account.
$17,409
$22,632
$21,761
$20,891
3. What is the value of the option to abandon the project?
$1,086
$923
$977
$760
$1,140
In: Finance
You are trying to value the stock of XYZ Corp. Total earnings for year 1 are forecasted to be $115 million. You know that the company plans on paying out 33% of its earnings in the form of dividends and 23% in the form of share repurchases each year, and that all of the growth in future earnings will be through retained earnings. The company's return on new investment is 15%, its cost of equity is 12% and it has 136 million shares outstanding. Given this information, estimate the current share price for XYZ Corp. Round your answer to two decimals (do not include the $-symbol in your answer).
In: Finance
Sam, a 42-year-old man, was booked for an endoscopy at a local clinic. Prior to the procedure he was injected with sedatives, but after several minutes the nurse noticed Sam seemed uncomfortable and required additional sedation. She used the same syringe, dipped it in the open sedative vial and re-injected him. The procedure continued as normal. Several months later, Sam, suffering from swelling of the liver, stomach pain, fatigue and jaundice, was diagnosed with Hepatitis C. The Centers for Disease Control was contacted, as 84 other cases of liver disease were linked to the clinic. It was believed that the sedative vial may have been contaminated from the backflow into the syringe and that the virus may have been passed on from the contaminated vial. Several health-care workers commented that reusing the syringe on the same patient (and thus dipping a used syringe into a common vial) was common practice.
Reference: Centers for Disease Control and Prevention, Atlanta. Syringe reuse linked to hepatitis C outbreak. Sonner, S., Associated Press
What do you think about this case (cases) that the CDC investigated? Should health care workers have anticipated that using a common vial between patients might lead to infection? How common do you think these types of incidents are?
In: Nursing
In March of this year, the Federal Reserve lowered the reserve requirement to zero.
What do you think of this? Explain. 2-3 sentences is plenty. Your grade will be based on your explanation (there's not a "right" answer).
In: Economics
Let's say that in 2019, Mary Jones was employed all year at a job making $61,000 in wages, that is, gross income, and, after $21,000 was "taken out" in various taxes and fees, she was clearing $40,000 per year in net income. Let's say that this is the only source of income for her family. She and her family spent $39,000 and saved the other $1,000. What is her A.P.C.? Is this good for our economy, in your opinion? Or bad? WHY? If she earns a pay raise of $1,000 after taxes, and spends $700 of it, what is her M.P.C.? Is this good for our economy? Or bad? Why? What happens to the other $300?
In: Economics
In: Economics
The patient is a 57-year old woman with a history of hypertension and chronic stable angina. She arrives in the ED complaining of indigestion-type pain that occurs more frequently than her chest pain and takes over 20 minutes to go away. She appears mildly short of breath, with vital signs of BP 155/98, pulse rate 100, respiratory rate 24/min.
What should be considered as the most likely cause of this patient’s pain? Why?
What is the difference between stable and unstable angina?
Why might this new pain most likely be considered unstable angina?
In: Nursing
The following table shows the nominal returns on Brazilian stocks and the rate of inflation.
| Year | Nominal Return (%) | Inflation (%) |
| 2012 | 0.4 | 7.4 |
| 2013 | -17.0 | 7.5 |
| 2014 | -15.0 | 8.0 |
| 2015 | -43.0 | 12.3 |
| 2016 | 67.8 | 7.9 |
| 2017 | 28.5 | 4.5 |
a. What was the standard deviation of the market returns? (Use decimals, not percents, in your calculations. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
b. Calculate the average real return. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places)
In: Economics