Assume that the price of real estate is determined by P=PV(all cash flows generated by the real estate).

After you have graduated you work for some years and can save some money. You decide to invest in a house which you want to rent out for a rate of SEK 11,000 per month. Assume that the rental rate will increase with 1.2% per year (which is 0.1% per month). (For the sake of simplicity, also assume that there are no further costs involved e.g. renovating or repair).

1. As the market risk of renting out the house is low, you think that a discount rate of 5.0% (APR with monthly compounding) would be appropriate. What is the price of the house under the assumption that the cash flows from rent will last forever?

Answer: the price of the house under these assumptions is SEK ?????? million. (round to two decimals)

2. If discount rate is 1% lower than 5.0% what is the price of the house?

Answer: the price of the house is SEK ?????? million. (round to two decimals)

3. You want to make the valuation of the house more realistic by assuming that the time horizon for the valuation should be 50 years. Again, you assume that the house will generate SEK 11,000 rental income per month for the next 50 years, and the rental income is assumed to grow by 1.2% per year (or 0.1% per month). What is the value of the house with a discount rate of 5.0% APR with monthly compounding?

Answer: the price of the house is SEK ????? million. (round to two decimals)

4. Make the same assumptions as in (c) but assume a 1% lower discount rate. What is the price of the house?

Answer: the price of the house is SEK ??????? million. (round to two decimals)

Assume that the price of real estate is determined by P=PV(all cash flows generated by the real estate).

After you have graduated you work for some years and can save some money. You decide to invest in a house which you want to rent out for a rate of SEK 11,000 per month. Assume that the rental rate will increase with 1.2% per year (which is 0.1% per month). (For the sake of simplicity, also assume that there are no further costs involved e.g. renovating or repair).

a) As the market risk of renting out the house is low, you think that a discount rate of 5.0% (APR with monthly compounding) would be appropriate. What is the price of the house under the assumption that the cash flows from rent will last forever?

Answer: the price of the house under these assumptions is SEK  million. (round to two decimals)

b) If discount rate is 1% lower than 5.0% what is the price of the house?

Answer: the price of the house is SEK million. (round to two decimals)

c) You want to make the valuation of the house more realistic by assuming that the time horizon for the valuation should be 50 years. Again, you assume that the house will generate SEK 11,000 rental income per month for the next 50 years, and the rental income is assumed to grow by 1.2% per year (or 0.1% per month). What is the value of the house with a discount rate of 5.0% APR with monthly compounding?

Answer: the price of the house is SEK million. (round to two decimals)

d) Make the same assumptions as in (c) but assume a 1% lower discount rate. What is the price of the house?

Answer: the price of the house is SEK million. (round to two decimals)

1) Which of the statements below is​ FALSE?

A. Project A has a higher y−axis intercept for its NPV profile than mutually exclusive Project B. As long as the profile of Project A is above the profile of Project​ B, Project A will have a higher NPV value for that particular discount rate.

B. Project A has a higher y−axis intercept for its NPV profile than mutually exclusive Project B. As we proceed past the crossover rate to the right on the x−​axis, Project​ B's profile will be above Project​ A's profile.

C.Project A has a higher y−axis intercept for its NPV profile than mutually exclusive Project B. This means that Project A has a lower NPV than Project B when the discount rate is zero.

D. Project A and Project B are mutually exclusive. The two projects intersect in terms of NPV at a discount rate labeled the crossover rate

2) One method a company may use to handle a cash shortfall is to draw cash from savings.

A) True

B) False

3) Harris Electronics bills its clients on the first of the month. For​ example, any sale made in the month of July is billed August 1 and is due September 1. Clients traditionally pay as​ follows: 50% by the end of the first month​ August), 40% by the end of the second month​ (September), 8% by the end of the third month​ (October), and​ 2% default on their bills. What is the dollar value of January billings collected in​ April?

First Quarter Sales -Jan $88,000 Feb $74,000 March $96,000

Second Quarter Sales - April $99,000 May $82,000 June $63,000

A. $29,600

B.$0.00

C.$7,040

D.​$5,920

4) In terms of the​ float, the buyer of a product wants to​ ________ and the seller wants to​ ________.

A. increase the collection​ float; decrease the disbursement float

B. increase the disbursement​ float; decrease the collection float

C. decrease the collection​ float; decrease the disbursement float

D. decrease the disbursement​ float; decrease the collection float

5) Pacific Automotive has a​ $250,000 compensating balance loan with its bank. The terms of the loan call for Pacific to keep​ 10% of the loan as a compensating balance and pay interest at an annual rate of​ 6.50% on the entire amount. If the firm borrows the maximum amount for one​ year, what is the EAR on this​ loan?

A. ​6.50%

B. ​7.39%

C. ​7.22%

D. 6.87%

6) Bestor Bookkeeping has a​ $150,000 compensating balance loan with its bank. The terms of the loan call for Bestor to keep​ 8% of the loan as a compensating balance and pay interest at an annual rate of​ 7.50% on the entire amount. If the firm borrows the maximum amount for one​ year, what is the EAR on this​ loan?

A. ​8.15%

B. ​7.50%

C. ​8.67%

D. 8.35%

7) New York Investments​ (NYI), an investment banking​ firm, has proposed two types of payment plans for the IPO being considered by Albany Exploration. The first is a firm commitment of​ $40,000,000. The second is a best efforts arrangement in which NYI will receive​ $2.00 for every share sold up to a maximum of​ $3,600,000 for the​ 1,800,000 shares being offered. How much money will NYI earn under the firm commitment method if it is able to sell only​ 95% of the offering at a price of​ $25.00 per​ share?

a) $800,000

b) $1,080,000

c) $2,750,000

d) $2,200,000

7) Pacific Motors Inc. plans to issue​ $3,000,000 of commercial paper with a

6−month maturity at​ 98% of par value. What is the​ EAR?

A.​4.08%

B.​4.12%

C.​4.00%

D.2.00%

8) ​Often, in​ bankruptcy, the current managers continue to run the business while it operates under the reorganization​ plan, but the court may also appoint a trustee to oversee the operations and protect the rights of the claimants during this period of time.

True

False

1. Chloe plans to invest some of her savings into two blue-chip stocks, namely Stock A and Stock B. Suppose that the mean and standard deviation of the annual return of Stock A are 5% and 5%, respectively, and the mean and standard deviation for the annual return of Stock B are 10% and 10%, respectively. In this investment portfolio, Chloe will put 50% of her money into Stock A and 50% of her money into Stock B.

   1. (i) [3 marks] If the correlation coefficient of the two stock returns is -0.2, do you think that this investment portfolio can achieve diversification? (for this one, i think corr is the indicator of diversification, in this question, Corr=-0.2<0, which means achieve diversification. But the answer gives: "V[R]=26.25, cannot achieve portfolio diversification". please help, thx!

   2. (ii) [1 bonus mark] In order to achieve portfolio diversification, what advice will you give Chloe?

The table below lists the number of games played in a yearly best-of-seven baseball championship series, along with the expected proportions for the number of games played with teams of equal abilities. Use a 0.05 significance level to test the claim that the actual numbers of games fit the distribution indicated by the expected proportions.

Ho:     A. The observed frequencies agree with two of the expected proportions.

          B. At least one of the observed frequencies do not agree with the expected proportions.

         C. The observed frequencies agree with the expected proportions.

          D. The observed frequencies agree with three of the expected proportions.

Answer Ho: ________

H1:   A. The observed frequencies agree with two of the expected proportions.

          B. At least one of the observed frequencies do not agree with the expected proportions.

         C. The observed frequencies agree with the expected proportions.

          D. The observed frequencies agree with three of the expected proportions.

Answer H1: ________

Calculate the test statistic,?

?2.

?2= _____(Round to three decimal places as needed.)

Calculate the P-value.

P-value=________(Round to four decimal places as needed.)

What is the conclusion for this hypothesis test?

A. Fail to reject H0. There is sufficient evidence to warrant rejection of the claim that the actual numbers of games fit the distribution indicated by the expected proportions..

B. Reject H0. There is sufficient evidence to warrant rejection of the claim that the actual numbers of games fit the distribution indicated by the expected proportions.

C. Fail to reject H0. There is insufficient evidence to warrant rejection of the claim that the actual numbers of games fit the distribution indicated by the expected proportions.

D. Reject H0. There is insufficient evidence to warrant rejection of the claim that the actual numbers of games fit the distribution indicated by the expected proportions.

Three couples and two individuals (eight total people) have been invited to an investment seminar and have agreed to attend.

- Suppose the probability that any particular couple or individual arrives late is .4 (a couple will travel together in the same vehicle, so either both people will be on time or else both people will arrive late).

- Assume that different couples and individuals are on time or late independently of one another.

- Calculate the probability that 6 or more people arrive at the seminar on time.

Hint: consider the disjoint cases: exactly 6 are on time, exactly 7 are on time, exactly 8 are on time, then think of all the combinations of couples and individuals that yield that amount.

Please dont copy the answer from another post and explain !!!

Two insulation thickness alternatives have been proposed for a process steam line subject to severe weather conditions. One alternative must be selected. Estimated savings in heat loss and installation cost are given below:

b.) Useful life of 2 cm Thickness alternative is 8 years and useful life of 5 cm thickness alternative is 7 years. Which thickness would you recommend for a MARR= 9% per year and negligible market (salvage) values using Present Worth Analysis and Annual Worth Analysis ? (Use repeatability assumption)

IN EXCEL PLZ!!

An experiment was conducted to test the effect of a new drug on a viral infection. After the infection was induced in 100 mice, the mice were randomly split into two groups of 50. The first group, the control group, received no treatment for the infection, and the second group received the drug. After a 30-day period, the proportions of survivors, p̂1 and p̂2, in the two groups were found to be 0.36 and 0.64, respectively.

(a) Is there sufficient evidence to indicate that the drug is effective in treating the viral infection? Use α = 0.05.

(b) Find the test statistic and rejection region. (Round your answers to two decimal places. If the test is one-tailed, enter NONE for the unused region.)

(c) Use a 95% confidence interval to estimate the actual difference (p₁ − p₂) in the survival rates for the treated versus the control groups. (Round your answers to two decimal places.)