Business, 17.09.2021 14:00 nallaico585
Consider these long-term investment data:
∙ The price of a 10-year $100 par value zero-coupon inflation-indexed bond is $84.49.
∙ A real-estate property is expected to yield 2% per quarter (nominal) with a SD of the
(effective) quarterly rate of 10%.
a. Compute the annual rate of return on the real (i. e., inflation-indexed) bond.
b. Compute the continuously compounded annual risk premium on the real-estate
investment.
c. Use the formula in footnote 17 and Excel’s Solver or Goal Seek to find the standard deviation of the continuously compounded annual excess return on the real-estate investment.
d. What is the probability of loss or shortfall after 10 years?
Answers: 2
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Business, 21.06.2019 22:20
Amachine purchased three years ago for $720,000 has a current book value using straight-line depreciation of $400,000: its operating expenses are $60,000 per year. a replacement machine would cost $480,000, have a useful life of nine years, and would require $26,000 per year in operating expenses. it has an expected salvage value of $130,000 after nine years. the current disposal value of the old machine is $170,000: if it is kept 9 more years, its residual value would be $20,000. calculate the total costs in keeping the old machine and purchase a new machine. should the old machine be replaced?
Answers: 2
Consider these long-term investment data:
∙ The price of a 10-year $100 par value zero-coupon infl...
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