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DaniilM [7]
3 years ago
6

Why must real options have positive​ value? ​(Select all the choices that​ apply.)

Business
1 answer:
yarga [219]3 years ago
5 0

Answer:

A. Real options must have positive value becasue they are only exercised when doing so would increase the value of the investment.

B. If exercisung the real option would reduce value, managers ca allow the option to go unexercised.

D, Having the real option but not the obligation to act is valuabale.

Explanation:

Because real option are options or choices made available to managers of a firm concerning investment their choices are meant to bring about a positive growth and return on the investments.

So if any of the choices presented to these managers are going to reduce the values or have other negative impacts on the investment and its value, then the option which is the real option or ideal option canbe forgone.

Cheers.  

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Economic value creation

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When a round of downsizing forced Olivia's boss, Karen, to ask Olivia to absorb the responsibilities of the laid-off grant write
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A

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3 years ago
Prock Petroleum's stock has a required return of 15%, and the stock sells for $60 per share. The firm just paid a dividend of $1
Ganezh [65]

Answer:

Price =[PVF15%,1*D1]+[PVF15%,2*D2]+[PVF15%,3*D3]+[PVF15%,4*D4]+[PVF15%,4*Terminal value at year4 ]

60 = [.86957* 1.3]+[.75614*1.69]+[.65752*2.197]+[.57175*2.8561]+[.57175*TV]

     = 1.1304+ 1.2779+ 1.4446+ 1.6330+ .57175TV

60 = 5.4859+.57175TV

Terminal value = [60-5.4859]/.57175

         = 54.5141/.57175

       = $ 95.3460

Terminal value=D4(1+g)/(Rs-g)

95.3460 =2.8561(1+g)/(.15-g)

95.3460(.15-g)= 2.8561-2.8561g

  14.3019- 95.3460g = 2.8561-2.8561g

   95.3460g-2.8561g = 14.3019-2.8561

     92.4899 g = 11.4458

   g = 11.4458/92.4899

        = .1238 or 12.38%

Growth after year4 = 12.38%

**D1 =1(1+.30)=1.3

D2 =1.3(1+.3)=1.69

D3 = 1.69(1+.3)= 2.197

D4= 2.197(1+.3)= 2.8561

6 0
2 years ago
Read 2 more answers
Ohlson Co. is preparing an Excel spreadsheet for its 20-year, 4.5%, $500,000 bonds payable. The bonds were issued on January 1 t
uranmaximum [27]

Answer:

=E7*C2/2

Explanation:

The interest expense will be the carrying value of the bond times the effective interest rate.

On cell C8 we have the interest expense

On E7 we have the carrying value which is the outstanding balance.

Then, on C2 we got the effective rate

As this is an annual formula, we must divide by two to convert to semiannual rate.

A file is attached for how the excel sheet looks like

6 0
2 years ago
The Shoal Company's manufacturing costs for the third quarter of 2019 were as follows: (CPA adapted) Direct materials and direct
creativ13 [48]

Answer: $1,017,000

Explanation:

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Calculating therefore would give us,

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= $1,017,000

$1,017,000 is the amount that should be considered product costs for external reporting purposes.

If you need any clarification do comment.

7 0
2 years ago
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