On Monday morning you sell one June T-bond futures contract at 97:27, that is, for $97,843.75. The contract's face value is $100
1 answer:
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Answer:
$50
Explanation:
Given,
Current Net income = $2,000,000
No. of common shares today = 500,000
Current market price per share = $40
Anticipated Net income in 1 year = $ 3,250,000
Anticipated No. of common shares in 1 year = 500,000 +150000 =650,000
From this data, then
The current Earnings Per Share(EPS) =
Current Price/Earning ratio =
Anticipated EPS in 1 year=
If the company's P/E ratio remain as that of the current at 10, then
The anticipated price of stock in 1 year = Anticipated EPS * P/E ratio in 1 year
= $5 *10 = $50
Answer:
The best choice is process A since it has the highest EMV of $330000
Explanation:
there is a 50% chance that they will sell 50,000 units, and a 50% chance that they will sell 100,000 units
The decision tree is attached below, the calculations for the decision tree is given as:
The item sells for $10. Process A requires an investment of $120,000 for design and equipment, but results in a $4 per unit cost.
If there is high demand, they will sell 100,000 units, The profit = 100000($10-$4) - $120000 = $480000.
If there is low demand, they will sell 50,000 units, The profit = 50000($10-$4) - $120000 = $180000.
The EMV of process A = 0.5($480000) + 0.5($180000) = $330000
Process B requires only a $100,000 investment, but its per unit cost is $5
If there is high demand, they will sell 100,000 units, The profit = 100000($10-$5) - $100000 = $400000.
If there is low demand, they will sell 50,000 units, The profit = 50000($10-$5) - $100000 = $150000.
The EMV of process B = 0.5($400000) + 0.5($150000) = $275000
If the item is outsourced, there is virtually no cost other than the $6 per unit that they would pay their supplier
If there is high demand, they will sell 100,000 units, The profit = 100000($10-$6) = $400000.
If there is low demand, they will sell 50,000 units, The profit = 50000($10-$6) = $200000.
The EMV of Buying = 0.5($400000) + 0.5($200000) = $300000
The best choice is process A since it has the highest EMV
