Frank Zanca is considering three different investments that his broker has offered to him. The different cash flows are as follows: End of Year A 1 $300 B C $400 2 $300 3 $300 4 $300 $300 $600 5 $300 6 $300 $300 $300 $600 7 8 Because Frank only has enough savings for one investment, his broker has proposed alternative C to be, according to his expertise, "the best in town." However, Frank questions his broker. Calculate the present value of each investment, assuming a 15% discount rate. Which is Frank's best alternative? Select one: a. Investment A O b. Investment B c. Investment C O d. He should not invest in any of the suggested investments O e. All of the investments are equally good

All parts are under one questions and per your policy therefore can be answered.  4. Risk aversion Erik is an investor with $5,000 available for investment. He has the following three investment possibilities from which to choose: Option Scenarios 1 Keep the $5,000 in cash for one year. 2 Invest in a friend’s business with a   50% chance of getting $10,000 after one year and a   50% chance of getting nothing. 3 Invest in a relative’s business with a   30% chance of getting $15,000 after one year,   20% chance of getting $2,500 after one year,   50% chance of getting nothing.    A. If Erik is indifferent about these three investment options, and he thinks that they are worth the same to him. Therefore, which of the following statements is true about Erik?   He is risk-neutral.   He is risk-averse.   He is risk-loving.   None of these descriptions is accurate.     B. Later, while examining the same investment alternatives,…

Michey Lawson is considering investing some money that he inherited. The following payoff table gives the profits that would be realized during the next year for each of the three investment alternatives Mickey is considering: STATE OF NATURE DECISION ALTERNATIVE GOOD ECONOMY POOR ECONOMY Stock market 75,000 -20,000 Bonds 55,000 30,000 CDs 45,000 20,000 Probability 0.3 0.7 Show complete work in your answers to parts a-e: a) What kind of decision-making environment is this?

Stan Marsh, an investor, is considering two financing plans for purchasing a parcel of real estate costing $152,264. Alternative 1 involves paying cash; alternative 2 involves obtaining 82% financing at 9.4% interest. If the parcel of real estate appreciates in value by $17,153 in 1 year, calculate (a) Stan's net return and (b) his return on equity for each alternative. If the value dropped by $17,153, what effect would this have on your answers to parts a and b?