Hello. Thank you for considering my offer. I will re-price to $40 please, provide a quality answer. Solve the four problems below and write a 100-125 word response explaining the results you obtained for each of the selected questions. IN-TEXT CITATION AND ALPHABETIZED REFERENCE SECTION IS REQUIRED TO ANSWER THESE QUESTIONS SEE EXAMPLE BELOW: EXAMPLE: ………As outlined by Hedstrom (1998), the challenges of digital preservation are multifaceted, involving a mixture of technical and organizational issues. Most digital preservation researchers (Besser, 2000; Connaway, O'Neill, & Prabha, 2006) agree that none of the current preservation strategies would work……… Reference Besser, H. (2000). Digital longevity handbook for digital projects: A management tool for preservation and access. Andover, MA: Northeast Document Conservation Center. Connaway, L. S., O'Neill, E. T., & Prabha, C. (2006). Last copies: What's at risk? College and Research Libraries, 67(4), 370-379. Hedstrom, M. (1998). Digital preservation: A time bomb for digital libraries. Computers and the Humanities, 31(3), 189-202. QUESTION 1: If the P/E ratio on the S&P 500 is 10, given historical earnings growth patterns, what would be a reasonable estimate of long-run future expected rates of return on the stock market? Assume a long-run inflation rate of 2.5% per annum. QUESTION 2: Draw a final payoff diagram for a stock and a bond, where the bond promises to pay off $500 in 1 year.Hello. Thank you for considering my offer. I will re-price to $40 please, provide a quality answer.



Solve the four problems below and write a 100-125 word response explaining the results you obtained for each of the selected questions.


IN-TEXT CITATION AND ALPHABETIZED REFERENCE SECTION IS REQUIRED TO ANSWER THESE QUESTIONS SEE EXAMPLE BELOW:

EXAMPLE:
………As outlined by Hedstrom (1998), the challenges of digital preservation are multifaceted, involving a mixture of technical and organizational issues. Most digital preservation researchers
(Besser, 2000; Connaway, O'Neill, & Prabha, 2006) agree that none of the current preservation strategies would work………


Reference

Besser, H. (2000). Digital longevity handbook for digital projects: A management tool for
preservation and access. Andover, MA: Northeast Document Conservation Center.

Connaway, L. S., O'Neill, E. T., & Prabha, C. (2006). Last copies: What's at risk? College and
Research Libraries, 67(4), 370-379.

Hedstrom, M. (1998). Digital preservation: A time bomb for digital libraries. Computers and the
Humanities, 31(3), 189-202.




QUESTION 1: If the P/E ratio on the S&P 500 is 10, given historical earnings growth patterns, what would be a reasonable estimate of long-run future expected rates of return on the stock market? Assume a long-run inflation rate of 2.5% per annum.


QUESTION 2: Draw a final payoff diagram for a stock and a bond, where the bond promises to pay off $500 in 1 year.


QUESTION 3: A firm has a debt with a face value of $100. Its projects will pay a safe $80 tomorrow. Managers care only about shareholders. A new quickie project comes along that costs $20, earns either $10 or $40 with equal probabilities, and does so by tomorrow.
(a) Is this a positive NPV project?
(b) If the new project can only be financed with a new equity issue, would the shareholders vote for this? Would the creditors?
(c) Assume the existing bond contract was written in a way that allows the new projects to be financed with first collateral. New creditors can collect $20 from the existing projects surely pay. Would the existing creditors be better off?
(d) What is the better arrangement from a firm-value perspective?


QUESTION 4: Consider a firm with 80 shareholders, including yourself, who each own 1 share worth $10. In addition, I own 20 shares (for a firm total of 100 shares) and I am trying to fire the management. To appease me, the management has offered to purchase my 20 shares at $9 per share. How would this change the value of your share?