# Finance help.

**Question 1**

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Order Paper NowPlease use the information below to answer questions 1 through 4. There are two periods of time, t_{0} and t_{1}. Michael has a wealth of $100 million. Michael has three potential investment opportunities. The first investment opportunity is building a shopping center; the cost is $60 million at t_{0} and pays off $72 million at t_{1}. The second investment opportunity is building a parking garage, which would cost $40 million at t_{0} and pays off $55 million at t_{1}. The third project is building a club for $5 million at t_{0} which pays off $15 million at t_{1}. The local bank lets Michael lend and borrow at the same rate, which is 15% per period. Michael does not value future consumption, and instead only cares about consumption today at t_{0}. He does not value consumption at t_{1} at all. Please give your answers in $ millions, to two decimal places. For example, if the answer is $53.247, please input 53.25.

What is the NPV (net present value) of the project which has the highest NPV?

**Question 2**

What is the most that Michael can consume at t_{0}?

**Question 3**

Suppose the three projects were mutually exclusive. What is the most Michael can consume at t_{0}?

**Question 4**

The bank has now decided to charge Michael 20% when he wants to borrow, but he can only lend to the bank at 10%. What is the most that Michael can consume at t_{0}, given this new condition? Do not assume for Question 4 that the projects are mutually exclusive.

**Question 5**

Please use the information below to answer questions 5 through 8. Rahul is considering three projects which have the following cash flows.

Project |
C |
C |
C |
C |

A |
-5000 |
2500 |
1500 |
2100 |

B |
-700 |
450 |
300 |
400 |

C |
-400 |
100 |
150 |
200 |

What is the IRR of project A?

**Question 6**

What is the IRR of project B?

**Question 7**

If the discount rate is 6%, would Rahul choose to do project C?

**Question 14**

What is the 6 year nominal discount factor?

**Question 15**

What is the NPV of the project? Please answer in $ thousands. For example, if the answer is $2,594,510, please enter 2595

**Question 16**

What is the IRR of the project?

**Question 17**

Please use the information below to answer questions 17 through 19. Jonathan is allocating his portfolio between two risky stocks, A and B. Stock A has an expected return of 15% with a standard deviation of 30%. The expected return and standard deviation for Stock B are 10% and 12%, respectively. The two stocks are positively correlated, with a correlation coefficient of +0.4. Jonathan’s wealth advisor suggests allocating 30% of his wealth in A and 70% of his wealth in B. What is the expected return of Jonathan’s portfolio, if he listens to his wealth advisor?

**Question 18**

What is the standard deviation of Jonathan’s portfolio, if he listens to his wealth advisor?

**Question 19**

What is the standard deviation of Jonathan’s portfolio, if he instead invests 50% of his wealth in Stock A, and puts the rest in a risk-free asset which has a return of 3%?

**Question 20**

Mary lives in a country whose financial markets satisfy the assumptions of the Capital Asset Pricing Model (CAPM). In this economy, there are two risky assets, Spruce Company and Walnut Corporation, along with a risk-free asset. Mary has invested 30% of her portfolio in the risk-free asset, 40% in Spruce, and the remaining 30% in Walnut. In the entire economy, the total valuation of the Spruce Company is $4 million dollars. What is the total valuation of the Walnut Corporation, in millions of dollars? For example, if the answer is $12,000,000 please enter 12

**Question 21**

Please use the information below to answer questions 21 and 22. Let’s assume that the CAPM assumptions are all satsified. Research analysts at your securities firm have identified four well-diversified investment funds that have no unique risk. The characteristics of the funds are as follows:

Fund Name |
Expected Return |
Beta |

Alpha |
34% |
1.2 |

Beta |
40% |
1.5 |

Gamma |
48% |
1.7 |

Delta |
58% |
2.4 |

Three of the funds are correctly priced, and one of the funds is mispriced. Please identify the investment fund that is being mispriced by the market.

[removed]Alpha

[removed]Beta

[removed]Gamma

[removed]Delta

**Question 22**

Is the expected return of the mispriced fund too high, too low, or exactly right, given its beta?

[removed]Too high

[removed]Too low

[removed]Exactly right

[removed]There is insufficient information to answer this question

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