1.How much more would you be willing to pay for a machine that results in profits of $200 per month

1.How much more would you be willing to pay for a machine that results in profits of $200 per month and lasts for 10 years as compared to the one that lasts for 7 years only? Assume that your weighted average cost of capital is 12% and the risk free rate is 2%.2. Given the following information find the unknown and explain the logic in words as to why the answer you provide is or can be the only right answer. [8+7].3. spot rate 180-day forward Yuan per USD 4.95 5.12 USD per Euro ? 1.32 Rupee per USD 57.44 59.15 Interest rates USA 0.02 Europe 0.01 India 0.08 China 0.09 Identify if each of the following actions constitute hedging (explain in detail why an action is hedging or why not)a. An employee of Microsoft owns employee stock options in the company but his options are yet not vested. To avoid losses the employee short sells appropriate number of shares in the market.b. Worried about the decline in the prices of MSFT shares an individual buys put options on the stock with one year to maturity.c. A bakery takes a short position on the price of wheat, the main raw material of their business.Say for example AAPL has $60 billion in cash, $500 billion of equity, $0 in debt, $500 of assets, and ROE of 35%. Its competitors have ROE in the range of 10% to 20%. Based on the concepts you have learned in this class do you think there is still a lot more potential for the company to improve its ROE. If yes, how? If not, why?1. Which of the following actions are likely to land you in jail if you profit from your actions: (use appropriate financial terminology to make your point for each case). You have to provide reasons for EACH of the following situations.• Your friend is VP of finance for AAPL and he knows that AAPL is not doing well. While visiting you for dinner the discussion moves to smartphones. You think that they are the best thing that happened to mankind and that the smartphone industry is going to grow by leaps and bounds for the foreseeable future. On the other hand, he thinks that the industry has already run its course. To support his argument your friend says that he knows that AAPL, the pioneer in this industry, is going to announce its earnings tomorrow evening and that they are going to be well below expectations. Your friend continues to argue with you. The argument gets heated and you ask your friend to leave. The next day you call your friend and apologize for your behavior and take a sizeable short position in AAPL to show your friend that you value his opinion and patch up.• You are friends with the VP of sales of PKM ShoeSource. You go out for a drink and each of you ends up discussing your day. Your friend says that it is has been a tough day because he has had to deal with irate customers all day. His company just launched a high-profile shoe that has been advertised as a shoe with a rare spring. There is lot of hype surrounding the shoe but he has not been able to sell the shoes because the company has not been making enough number of shoes. He has had to send back customers all day saying that because of supply issues his company has only been manufacturing 500 pairs every week. You know that the key feature of the new shoe, the spring, is made of a rare metal found in Mongolia. You just came back from Mongolia where you were delayed for number of days because of landslides in the northwest region. These landslides have caused several mines to be shut and all roads have been rendered non-navigable. You determine that based on the extent of damage to the mines and roads the supply issues will have an irreparable impact on the company’s sales so you take a short position in the stock and profit handsomely.Your broker (and a friend) was in a conference with a company. There were five other stock analysts. The company just said that they had a blowout year and their earnings rose 700%. As soon as your friend heard that, he texted you and you took a large long position in the stock and made a killing.2. Identify and calculate possible profit opportunity using $1millon to make your point. [10]Spot rate (Romulan/$) 1.2813-mo forward (Romulan/$) 1.274US dollar 3-month interest rate 4.80%Romulan land 3-mo rate 3.20%

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