Furlion Co manufactures heavy agricultural equipment and machinery which can be used in difficult farming conditions. Furlion Co’s chief executive has been investigating a significant opportunity in the country of Naswa, where Furlion Co has not previously sold any products. The government of Naswa has been undertaking a major land reclamation programme and Furlion Co’s equipment is particularly suitable for use on the reclaimed land. Because of the costs and other problems involved in transporting its products, Furlion Co’s chief executive proposes that Furlion Co should establish a plant for manufacturing machinery in Naswa. He knows that the Naswan government is keen to encourage the development of sustainable businesses within the country.
Initial calculations suggest that the proposed investment in Naswa would have a negative net present value of $1·01 million. However, Furlion Co’s chief executive believes that there may be opportunities for greater cash flows in future if the Naswan government expands its land reclamation programme. The government at present is struggling to fund expansion of the programme out of its own resources and is looking for other funding. If the Naswan government obtains this funding, the chief executive has forecast that the increased demand for Furlion Co’s products would justify $15 million additional expenditure at the site of the factory in three years’ time. The expected net present value for this expansion is currently estimated to be $0.
It can be assumed that all costs and revenues include inflation. The relevant cost of capital is 12% and the risk free rate is 4%. The chief executive has estimated the likely volatility of cash flows at a standard deviation of 30%.
One of Furlion Co’s non-executive directors has read about possible changes in interest rates and wonders how these might affect the investment appraisal.
Required:
(a) Assess, showing all relevant calculations, whether Furlion Co should proceed with the significant opportunity. Discuss the assumptions made and other factors which will affect the decision of whether to establish a plant in Naswa. The Black Scholes pricing model may be used, where appropriate. (16 marks)
(b) Explain what is meant by an option’s rho and discuss the impact of changes in interest rates on the appraisal of the investment. (5 marks)
(c) Discuss the possibility of the Naswan government obtaining funding for further land reclamation from the World Bank, referring specifically to the International Development Association. (4 marks)
第1题
?? ????????Tornadoes(龙卷风) and heavy thunderstorms moved across the Great Lakes and into TrumbullCounty on Saturday evening: The storms were dramatic and dangerous.
?? GeorgeSnyder was driving the fire truck down Route 88 when he first noticed that afunnel(漏斗状的)cloud was behind him. "I stopped the truck and watched thefunnel cloud. It was about 100 feet off the ground and I sawit go up and down for a while. It was moving toward Bradley Road and then suddenly itdisappeared. Snyder said.??
?? Snyderonly saw one of the funnel clouds that passed through northeastern Ohio on Saturday.In Trumbull County,a tornado turned trees onto their sides. Some trees feel onto houses and cars.Other trees fell into telephone andelectrical wires as they went down.
?? AmandaSymcheck was having a party when the storm began. "I knew something waswrong, "she said. "I saw the sky go green and pink (??粉红色). Then it sounded like a train rushing toward the house. I started crying and told everyone togo to the basement for protection. "????
?? Thetornado caused a lot of damage to cars and houses in the area. It will take along time and much money to repaireverything. There was also serious water damage from the thunderstorms.The heavy rains and high wind caused thepower to go out in many homes.????
?? Thestorms caused serious flooding in areas near the river. More than four inchesof rain fell in parts of Trumbull County. The river was sohight that the water ran into streets and houses. Many streets had to be closedto Cars and trucks because of the high water. This made it difficult for firetrucks. police cars,and other rescue vehicles to help people who were introuble.??
?? Manypeople who live near the river had to leave their homes for their own safety.Some people re- ported five feet of water in their homes. Local and stateofficials opened emergency shelters for the people who were evacuated(撤走). The Red Crossserved meals to them.??
?? "This was a really intense storm. "said Snyder. People wereafraid. Mother Nature call be fierce. We were lucky this time. No one waskilled. "
The weather was nice in Trumbull County on Saturdayevening.????????????
A.Right
B.Wrong
C.Not mentioned
第2题
Which of the following is NOT true about credit cards?
A.It can encourage great sums of consumption
B.Shopkeepers, among others object to the use of credis cards because they add on the cost of the merchandise
C.Credit card holders actually pay for their shopping goods afer the purchase has been completed
D.The national economy enjoys extensive growth because of the use of credit cards
What is the main topic of the passage?A.Advantages and disadvantages of credit cards
B.Economic growth hacked up by the use of credit cards
C.Arguments against the use of ecredit cards
D.Credit cards make life easier
What are the arguments against the use of credit cards?A.It may lead to the overgrowth of the national economy.
B.The delay in the payment of shopping goods may bring damage to shopkeeprers’profits.
C.Some people may intentionally purchase goods that they cannot possbly aford
D.Those who pay by cash at the purehase will have to pay for the cost added to the product as the interest charge of credit cards
The writers purpose in this passage is to____.A.argue against credit card
B.deseribe a phenomenon
C.introduce us the disadvantage and advantage of credit card
D.propose an original viewpoint
请帮忙给出每个问题的正确答案和分析,谢谢!
第3题
(23)
A.They need layers of skins.
B.They need a great many poles.
C.They need a special knife.
D.They need many deerskin blankets.
第4题
A.There isn't a place to put pictures.
B.It's too big and heavy.
C.She doesn't like the color.
第5题
Most reptiles have three chambers in their hearts, although some do have four. But these that have four chambers, such as the crocodile, have two arteries (动脉) to mix the oxygen-heavy blood with oxygen-lean blood. Reptiles are cold-blooded, meaning that they are dependent on the environment for body heat. Yet the fossilized heart had four chambers in the heart as well as a single aorta. The single aorta means that the oxygen-rich blood was completely separated from the oxygen-poor blood and sent through the aorta to all parts of the body.
Mammals, on the other hand, me warm-blooded, meaning that they generate their own body heat end are thus mere tolerant of temperature extremes. Birds and mammals, because they are warm blooded, move more swiftly and have greater physical endurance than reptiles.
Scientists believe that the evidence now points to the idea that all dinosaurs were actually warm- blooded. Ironically, the particular dinosaur in which the discovery was made was a Tescelosaurus, which translates to "marvelous lizard." A lizard, of course, is a reptile.
According to the author, what theory was previously held and now is being questioned?
A.That dinosaurs were warm-blooded.
B.That dinosaurs had four-chambered hearts.
C.That dinosaurs were swifter and stronger than reptiles.
D.That dinosaurs were cold-blooded.
第6题
Hawaii
Famous for its (46) and (47) .
Average temperature: range from 71.9°F to (48) .
Annual rainfall in Honolulu: (49) .
Attractions for tourists: the beautiful weather and (50) .
第7题
Of course, my father is a gentleman of the old school, a member of the generation to whom a good deal of modern architecture is upsetting, but I am convinced that his negative response was not so much to the architecture as to a violation of his concept of the nature of money.
In his generation money was thought of as a real commodity (实物) that could be carried, or stolen. Consequently, to attract the custom of a sensible man, a bank had to have heavy walls, barred windows, and bronze doors, to affirm the fact, however untrue, that money would be safe inside. If a building's design made it appear impenetrable, the institution was necessarily reliable, and the meaning of the heavy wall as an architecture symbol dwelt in the prevailing attitude toward money.
But the attitude toward money has, of course, changed. Excepting pocket money, cash of any kind is now rarely used; money as a tangible commodity has largely been replaced by credit. A deficit (赤字) economy, accompanied by huge expansion, has led us to think of money as product of the creative imagination. The banker no longer offers us the safety: he offers us a service in which the most valuable element is the creativity for the invention of large numbers. It is in no way surprising, in view of this change in attitude, that we are witnessing the disappearance of the heavy-walled bank.
Just as the older bank emphasized its strength, this bank by its architecture boasts of imaginative powers. From this point of view, it is hard to say where architecture ends and human assertion (说法) begins.
The main idea of this passage is that______.
A.money is not as valuable as it was in the past
B.changes have taken place in both the appearance and the concept of banks
C.the architectural style. of the older bank is superior to that of the modern bank
D.prejudice makes the older generation think that the modern bank is unreliable
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