Finance

Suppose that a person won the Florida lottery and was offered a choice of two prizes

Question: Suppose that a person won the Florida lottery and was offered a choice of two prizes: (1) $500,000 or (2) a coin-toss gamble in which he or she would get $1 million if a head were flipped and zero if a tail. a. What is the expected dollar return on the gamble? b. Would …

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Callaway Associates, Inc. is considering the following mutually exclusive projects

Question: Callaway Associates, Inc. is considering the following mutually exclusive projects. Callaway’s cost of capital is 12%. Project A    PROJECT B 0 ($25,000) ($80,000) 1 $44,000 $65,000 2 $34,000 $30,000 3 $14,000 $ 0 4 $14,000 $5,000 a. Calculate each project’s NPV and IRR. b. Which project should be undertaken ? Why? Answer: In the …

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