You have launched a project. Several years later, due to competition in the business, cash flow drops and the present value of future cash flows is $12 million. You have the option to abandon the project, with recovery of $13 million from the sale of the equipment and real estate. You can either abandon the project now or wait for one year to decide. Assume one year standard deviation of the project is 25% and 2% risk-free rate. Do you want to abandon the project now or wait for one year to decide? Show your work to get full credit. Keep four decimals. (a). If you consider the option to abandon the project in one year as a put option, what’s the current value of the underlying asset and what’s the exercise price?
(b). What’s the call option price with the same terms (expiration dates, exercise price, underlying stock) using Black-Scholes model?
(c). What’s the value of the put option using put-call parity?
(d). Do you want to abandon the project now or wait for one year to decide? Why?

You have just been hired as a financial analyst for barrington industries. unfortunately, company headquarters (where all of the firm's records are kept) has been destroyed by fire. so, your first job will be to recreate the firm's cash flow statement for the year just ended. the firm had $100,000 in the bank at the end of the prior year, and its working capital accounts except cash remained constant during the year. it earned $5 million in net income during the year but paid $800,000 in dividends to common shareholders. throughout the year, the firm purchased $5.5 million of machinery that was needed for a new project. you have just spoken to the firm's accountants and learned that annual depreciation expense for the year is $450,000; however, the purchase price for the machinery represents additions to property, plant, and equipment before depreciation. finally, you have determined that the only financing done by the firm was to issue long-term debt of $1 million at a 6% interest rate. what was the firm's end- of-year cash balance? recreate the firm's cash flow statement to arrive at your answer

Oakmont company has an opportunity to manufacture and sell a new product for a four-year period. the company’s discount rate is 18%. after careful study, oakmont estimated the following costs and revenues for the new product: cost of equipment needed $ 230,000 working capital needed $ 84,000 overhaul of the equipment in year two $ 9,000 salvage value of the equipment in four years $ 12,000 annual revenues and costs: sales revenues $ 400,000 variable expenses $ 195,000 fixed out-of-pocket operating costs $ 85,000 when the project concludes in four years the working capital will be released for investment elsewhere within the company. click here to view exhibit 12b-1 and exhibit 12b-2, to determine the appropriate discount factor(s) using tables.

How many organs are supplied at a zero price? (b) how many people die in the government-regulated economy where the government-set price ceiling is p = 0? the quantity qd – qa. the quantity qe – qa. the quantity qd – qe. (c) how many people die in the market-driven economy?