If there is a 30% chance that a machine will break during your project, and if a new machine costs $90,000, what is the expected value of this risk?
Expected value of risk = Probability*new machine cost
Expected value of risk = .3*90000
Expected value of risk = $27000
If there is a 30% chance that a machine will break during your project, and if...
your investment has a 30% chance of losing 8%, a 40% chance of earning a 12% rate of return, and a 30% chance of earning a 15% return. What is your expected return in this investment. A 8.8% B 6.9% C 7.14% D 8.54%
a) [2 points.] Suppose you have a project that has a 70 per cent chance of doubling and a 30 per cent chance of halving your investment in a day. (This is a high-risk project indeed.) i. Compute the expected return and volatility of a one-period investment. ii. Compute the expected return per day, given that you can renew the project each day for a very long period of time in principle infinitely). b) If a security lies above the...
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Your company is investing in a 6-year project. The cost of the machine is $25,000 with a salvage value of $5000 at the end of the project. The machine will save labor costs but will have operating costs of $3000/ year. What is the annual savings in labor in order to make a 10% return on your investment? $5,092 $8,740 $6,283 $8,092
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If there is a 20% chance we will get a 16% return, a 30% chance of getting a 14% return, a 40% chance of getting a 12% return, and a 10% chance of getting an 8% return. Question 1: What is the expected rate of return for this investment? (Please round your answer to the fourth decimal. E.g. if your answer is 1.11%, you should input 0.0111.) Question 2: What is the standard deviation for this investment? (Please round your answer to...
niveX M McGr. x_ Powex hoc 1380kaaa/topic12/patchnh6qx/ XYZ Company is considering whether a project requiring the purchase of new equipment is worth investing. The cost of a new machine is $340,000 including shipping and installation. The project will increase annual revenues by $400,000 and annual costs by $100,000. The machine will be depreciated via straight-line depreciation for three years to a salvage value of $40,000. If the firm does this project, $30,000 in net working capital will be required, which...
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