The reason why buying or selling financial securities in an efficient market is a zero NPV investment is because
- the price of a financial security in an efficient market is the present value of the expected future cash flows, and
- Financial securities are priced at their true value and investors cannot make excess profit from the transaction.
The simple definition of NPV is that your income will exactly equal your expenses. As a result, neither financial loss nor gain is possible. You won't be losing anything, and your business can continue operating and perhaps expand into new markets. There are cases where doing nothing has a positive net present value (e.g., strategic market entrance exercises).
When net present value is zero, all cash flows are at a standstill and future growth is not anticipated. In other words, you shouldn't put your money there. Having a negative net present value (NPV) also suggests that your future profits will decrease, assuming the investment has already been made and is being amortised over time. To think that something like this could happen in real life is almost impossible to fathom.
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Answer:
$8.078 million
Explanation:
we must use the same time periods, so instead of using an annual discount rate, we should use a quarterly rate:
effective quarterly interest = (1 + 0.16)¹/⁴ - 1 = 0.0378 = 3.78%
dividends per quarter = 0.3 million + 0.05 million = $0.35 million
terminal value of firm in quarter 4 = 0.35 / 0.0378 = $9.26 million
present value of terminal value = $9.26 / (1.0378)⁴ = $7.983 million
present value of 4 quarterly dividends = $0.3 x 3.64879 (PVIFA, 3.78%, 4 periods) = $1.095 million
NPV = -$1 + $1.095 + $7.983 = $8.078 million
The answer for this question is: Uncertainty
Uncertainty is an occurrence when people cold not surely predict the outcome of their current situation.
This component will always exist no matter the plan or the situation that the company has, so this component will not exhibit waves like any other component did
I would say the best answer to go with is A. Not to sure.
Answer:
2. Relationship
3. Show table
4.
5. Close
6.
7.
8. Create
Explanation: Just did it on edge
