Financial Management: Corporate Finance Answers Assessment Answer

Answer:


1. The risk aversion is the process of making the decision when an investor faces two similar expected returns and prefers the one with the lower risk. Yes, I agree that the risk aversion is process that will which is the outcome of the corporate managers to invest in a low risk project. The risk aversion process is driven by risk appetite, which comes with two variations on a particular project (Heron & Lie 2016).

For example, a project may look forward to invest $ 22 million and the expected return is $ 35 million over five years or the management may decide to invest in the project of $ 60 m with an expected return of 135 million over 8 years, followed by a bigger deviations in the earnings during the initial years. The management needs to decide upon the risk in each between the project failing or generating something in the initial years. The risk mitigation is the process of choosing a short-term profit during a short period. The source of the risk aversion should be further based on the weighing the two investment options and making a feasible decision to carry out a particular project (Guiso et al., 2013).

2. In order to decide whether the ordinary annuity can have the same present value as the perpetuity, the future value constraint needs to be taken into consideration.  The present value is calculated using

PV = FV (1/1+R) n

Where,

R = Discounting rate

n = No. of years

By taking into consideration the above formula, we can say that even if the cash flows and the discount factor in nature of the ordinary annuity cannot have the same present value. This is because even if the discount factor is same, due to the increasing power of the value of n (no. of years) the ordinary annuity of the present value will also keep increasing (Brealey et al., 2012).

For example if the value of the r is 0.8 in a particular year for the first year then discounting factor is (1+0.8), the next year the discounting factor would become (1+0.8)2 which is 3.24. In this way, the free cash flow will reduce due to the increasing discounting factor, even if the cash flows and the discounting rates remains the same (Bierman & Smidt 2012).

Reference List

Bierman Jr, H., & Smidt, S. (2012). The capital budgeting decision: economic analysis of investment projects. Routledge.

Brealey, R. A., Myers, S. C., Allen, F., & Mohanty, P. (2012). Principles of corporate finance. Tata McGraw-Hill Education.

Guiso, L., Sapienza, P., & Zingales, L. (2013). Time varying risk aversion (No. w19284). National Bureau of Economic Research.

Heron, R. A., & Lie, E. (2016). Do Stock Options Overcome Managerial Risk Aversion? Evidence from Exercises of Executive Stock Options. Management Science.

Download Sample Now

Earn back money you have spent on downloaded sample



Upload Document Document Unser Evaluion Get Money Into Your Wallet



Cite This work.

To export a reference to this article please select a referencing stye below.

Assignment Hippo (2022) . Retrive from https://assignmenthippo.com/sample-assignment/financial-management-corporate-finance-answers-assessment-answer

"." Assignment Hippo ,2022, https://assignmenthippo.com/sample-assignment/financial-management-corporate-finance-answers-assessment-answer

Assignment Hippo (2022) . Available from: https://assignmenthippo.com/sample-assignment/financial-management-corporate-finance-answers-assessment-answer

[Accessed 20/05/2022].

Assignment Hippo . ''(Assignment Hippo,2022) https://assignmenthippo.com/sample-assignment/financial-management-corporate-finance-answers-assessment-answer accessed 20/05/2022.



Buy Financial Management: Corporate Finance Answers Assessment Answers Online

Talk to our expert to get the help with Financial Management: Corporate Finance Answers Assessment Answers from Assignment Hippo Experts to complete your assessment on time and boost your grades now

The main aim/motive of the finance assignment help services is to get connect with a greater number of students, and effectively help, and support them in getting completing their assignments the students also get find this a wonderful opportunity where they could effectively learn more about their topics, as the experts also have the best team members with them in which all the members effectively support each other to get complete their diploma assignment help Australia. They complete the assessments of the students in an appropriate manner and deliver them back to the students before the due date of the assignment so that the students could timely submit this, and can score higher marks. The experts of the assignment help services at www.assignmenthippo.com are so much skilled, capable, talented, and experienced in their field and use our best and free Citation Generator and cite your writing assignments, so, for this, they can effectively write the best economics assignment help services.

Get Online Support for Financial Management: Corporate Finance Answers Assessment Answer Assignment Help Online

Want to order fresh copy of the Sample Financial Management: Corporate Finance Answers Assessment Answers? online or do you need the old solutions for Sample Financial Management: Corporate Finance Answers Assessment Answer, contact our customer support or talk to us to get the answers of it.

Assignment Help Australia
Want latest solution of this assignment

Want to order fresh copy of the Financial Management: Corporate Finance Answers Assessment Answers? online or do you need the old solutions for Sample Financial Management: Corporate Finance Answers Assessment Answer, contact our customer support or talk to us to get the answers of it.


Submit Your Assignment Here

AssignmentHippo Features

On Time Delivery

Our motto is deliver assignment on Time. Our Expert writers deliver quality assignments to the students.

Plagiarism Free Work

Get reliable and unique assignments by using our 100% plagiarism-free.

24 X 7 Live Help

Get connected 24*7 with our Live Chat support executives to receive instant solutions for your assignment.

Services For All Subjects

Get Help with all the subjects like: Programming, Accounting, Finance, Engineering, Law and Marketing.

Best Price Guarantee

Get premium service at a pocket-friendly rate at AssignmentHippo

FREE RESOURCES

  • Assignment Writing Guide
  • Essay Writing Guide
  • Dissertation Writing Guide
  • Research Paper Writing Guide

FREE SAMPLE FILE

  • Accounts
  • Computer Science
  • Economics
  • Engineering

Client Review

I was struggling so hard to complete my marketing assignment on brand development when I decided to finally reach to the experts of this portal. They certainly deliver perfect consistency and the desired format. The content prepared by the experts of this platform was simply amazing. I definitely owe my grades to them.

Tap to Chat
Get instant assignment help