FINA 365 Study Guide - Midterm Guide: Standard Deviation, Weighted Arithmetic Mean, Capital Asset Pricing Model
28 Mar 2017
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Invest 500$ today, will receive 550$ in one year at 8% a year. As long as npv is positive, the decision increases the value of the firm. You have saved 1500$ and are about to buy a tv. You take it home today and will owe 1500 a year from now. Savings account earns 5%, what is the npv. Offer a: single payment of million upfront from (quenchit) Offer b: ,000 per year at the end of the next three years (powerup) Estimated cost of capital is 10% r = 23. 38% 23. 38% > 10%, according to irr, option a is best. You own a small piece of commercial land near a university. You have been approached recently with an offer to buy it for. You are also considering three alternative uses yourself: a bar, a coffee shop, and an apparel store. You have collected the following information about the uses. Cash flows can be valued as growing perpetuity.
