There are nonlinear applications in which there is a single local optimal solution that is also the global optimal solution
Indicate whether the statement is true or false
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What is the FTC three-day cooling off rule? What purpose does the rule serve?
What will be an ideal response?
Explain the phrase “it takes money to make money” as it relates to the importance of the capital expenditures budget.
What will be an ideal response?
Write the appropriate constraint for the following condition: Choose no fewer than 3 projects
Consider a capital budgeting example with five projects from which to select. Let x1 = 1 if project a is selected, 0 if not, for a = 1, 2, 3, 4, 5. Projects cost $100, $200, $150, $75, and $300, respectively. The budget is $450.
Derek's Dinghies and Rafts (DDR) is the world's largest manufacturer of rowboats and rafts. At the end of the current year, analysts expect DDR's EBIT to be $2M and they expect the same earnings annually in perpetuity
DDR's shareholders require a return of 12.5% and there are 5M common shares outstanding. DDR has debt with a total face value of $5M. The bonds have an annual coupon of 3%, are rated AAA and yield 3%. The CFO of DDR believes that the company is under-levered. To increase the leverage, the CFO proposes to repurchase 1.2M shares at a price of $1.25 per share. The repurchase will be financed by additional borrowing. The corporate tax rate is 40%. What is the value of the company prior to the repurchase, and what is the stock price after the repurchase? A) Value (prior) = $9.6M; Stock price (after) = $1.50 B) Value (prior) = $9.6M; Stock price (after) = $1.14 C) Value (prior) = $11.6M; Stock price (after) = $1.50 D) Value (prior) = $11.6M; Stock price (after) = $1.14 E) Value (prior) = $11.6M; Stock price (after) = $3.21