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Abi owns $400,000 of shares in company A. Daily volatility of share price is 1%. Calculate the 28 day value at risk that shows the most Abi can expect to loose during a 28 day period. Abi wishes to be 90% certain that the actual loss is any month will be less than your predicted figure.
Sorry the question is different to this. I can’t find a way to delete this thread so I’ll continue posting my intended question.
This is the question:
ABC market capitalisation is 240 million USD. This is based on a beta of 1.6
Risk free rate is 4% and market rate of return is 6%.
ABC is funded entirely by equity and generates annual cash surplus of 28.8 million USD.
The expansion will cost 50 million USD and will generate future cash flows of 12 million USD in perpetuity. New business will reduce beta to 1.4.
Calculate APV for the expansion.Where do these questions come from and why don’t you consult the model answer for an explanation and solution? If there is a step in the model answer that you can’t understand then I’ll deal with that, but at the moment it seems to me I’m answering college homework for you. If that is the case, then your lecturer will provide full answers and explanation.
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