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FIN 419 Final Exam Guide (New)
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Risk and probability Micro-pub, Inc., is considering the purchase of one
of two microfilm cameras, R and S. Both should provide benefits over
a10-year period, and each requires an initial investment of $4,000.
Management has constructed the following table of elements of rates of
return and possibilities for pessimistic, most likely, and optimistic results.
2) Capital asset princing model (CAPM) Use the capital asset princing model
to find the required reurn.
3)a. What single investmentmade today, annual interest, will be worth $3,500 at
the end of 10 years?
b. What is the present value is $3,500 to be received at the end of 10 years if the
discount rate is 6%?
c. What is the most you would pay today for a promise to repay you $3,500 at
the end of 10 years if your opportunity cost is 6% ?
d. Compare, contrast, and discuss your findings in part a through c.
4) Loan Payment Determine the equal, annual, end-of-year payment required
each year over the life of the loan to repay it fully during the stated term of the
loan.