Solutions to Chapter 1

Choose the second payment plan for its lower present value of payments. 32. Installment plan: PV = $25 ( annuity factor(5%, 4 years) = $88.65 ... This is Ford, which has a beta of 1.05. b. General Electric has the lowest total volatility; the standard deviation of its returns is 28.3%. ... With the low-debt plan, equity falls by $200,000, so: D ... ................
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