The Lancer Leasing Company

has agreed to lease a hydraulic trencher to the C behavez Excavation c in aller-up for 20 ,000 a year over the following eight years . Lease payments are to be do at the begining of each year Assuming that Lancer invests these payments at an annual reckon of 9 share , how much will it have roll up by the discontinue of the eighth yearAnswerThe approaching evaluate (A ) of an investituregrowing at a rate r (compounding per year ) after n years is give as In this case a sum of 20 ,000 is being invested at the beginning of all year , therefore , future value of such an investment will be Here ,20 ,000 r 9 0 .09 AUsing the given values , the accumulated substance at the end of eighth year will be ,2 ) An investor currently has all of his wealth in Treasury bills . He is considering investing third gear of his funds in w orld-wide Electric , whose important is 1 .30 , with the remainder left in Treasury bills . The expected safe rate (Treasury bills ) is 6 percentage and the market chance bounteousness is 8 .8 percent . retard the beta and the expected drive away on the proposed portfolioAnswerComposition of the proposed portfolio is followingFraction invested in GE i .e . XGE 1 /3Fraction invested in Treasury bills i .e . XTB 2 /3 ?GE 1 .3 (givenBeta Treasury bills i .e ?TB 0 (as this is risk set-apart securityBeta of a portfolio is heavy average of those of individual securities of the portfolio . Therefore ?portfolio XGE ?GE XTB ?TB (1 /3 1 .3 (2 /3 0 1 .3 /3 0 .43Expected return of a security is given as its beta multiplied by risk premium plus the risk free rate . ThereforeExpected return of the GE stock i .e .RGE 6 1 .3 8 .8 6 11 .

44 17 .44Return of the Treasury bill i .e .RTB 6 (given ?RGE XTB ?RTB (1 /3 17 .44 (2 /3 6 5 .81 4 9 .813 ) The return expected from Project No .542 is 22 percent . The standard deviation of these returns is 11 percent . If returns from the aim are standardly distributed , what is the chance that the drop will allow for in a rate of return preceding(prenominal) 33 percent ? What is the profitability that the project will result in losses (negative rates of returnAnswerGiven 22 and 11Value of a variable X is given as X - z ?34567Q7Us`Dn ?fj -ng return above 33 ,X 33i .e .z (33 - 22 /11i .e .z 1The inquire probability will correspond to the area under everyday statistical distribution curve beyond z 1 i .e . from z 1 to z infinity . From regular distribution table , this area comes out to be 0 .5 - 0 .3413 0 .1587Therefore , the desired probability is Pprofit 33 0 .1587 15 .87Si milarlyFor the project...If you want to get a full essay, rank it on our website: OrderEssay.net

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