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Question
Mr. Dell has $100 income this year and zero income next year. The market interest rate is 10% per year. Mr. Dell also has an investment opportunity in which he can invest $50 this year and receive $80 next year. Suppose Mr. Dell consumes $50 this year and invests in the project. What is the NPV of the investment opportunity?
A. $5
B. $22.73
C. $0 (zero)
D. None of the above.
Answer
This answer is hidden. It contains 37 characters.
Related questions
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Suppose VS's stock price is currently $20. In the next six months it will either fall to $10 or rise to $30. What is the current value of a put option with an exercise price of $15? The six-month risk-free interest rate is 5% (periodic rate).
A. $5.00
B. $2.14
C. $0.86
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Q:
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B. Lend PV of $50 and sell two calls
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B. Fall exactly by the amount of the dividend
C. Fall by less than the amount of the dividend
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One key assumption of the Miller and Modigliani (MM) dividend irrelevance argument is that:
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B. There are no capital gains taxes
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