Coursera Answers

Q: Suppose that you wanted to be able to withdraw $10,000 at the end of Year 3 from a bank account that will pay you 5% interest in the first year, 7% interest in the second year, and 10% interest in the third year. What amount of money would you have to put in the bank today to be able to make that withdrawal at the end of Year 3 and have nothing left in the account after that withdrawal (round to the nearest dollar)? or Q: Suppose that you wanted to be able to withdraw $10,000 at the end of Year 3 from a bank account that will pay you 5% interest in the first year, 7% interest in the second year, and 10% interest in the third year. What amount of money would you have to put in the bank today to be able to make that withdrawal at the end of Year 3 and have nothing left in the account after that withdrawal (round to the nearest dollar)? $8,092 $4,420 None of these are true $6,920 $7,513 Explanation: The amount of money you would need to put in the bank today is approximately $8,101, w...

Q: Suppose the bank paid you interest at the rate of 15% per year. What amount of money would you have to put in the bank today, in order to be able to withdraw $10,000 at the end of Year 1, $20,000 at the end of Year 2 and $30,000 at the end of Year 3, and have nothing left in the account after the last withdrawal (round to the nearest dollar)? or Q: Let’s say you received interest from the bank at a rate of 15% annually. To be able to withdraw $10,000 at the end of Year 1, $20,000 at the end of Year 2, and $30,000 at the end of Year 3, and to have nothing left in the account after the last withdrawal (rounded to the closest dollar), how much money would you need to deposit in the bank today? $71,125 $43,544 $60,000 $32,154 None of these are true Explanation: Let’s walk through the process again, calculating the present value of the future cash flows, discounted at an interest rate of 15% per year, to determine how much money would be needed today to make the withdrawals

Q: You may use a spreadsheet like Excel to help you find the solution to this question. How much money would you have to put in the bank today, assuming that the bank account paid interest at the rate of 5% per year, in order to be able to withdraw $10,000 at the end of Year 1, $20,000 at the end of Year 2 and $30,000 at the end of Year 3, and have nothing left in the account after the last withdrawal (round to the nearest dollar)? or Q: To assist you in answering this issue, you can utilize a spreadsheet program such as Excel. In order to withdraw $10,000 at the end of Year 1, $20,000 at the end of Year 2, and $30,000 at the end of Year 3, and to have nothing left in the account after the last withdrawal (rounded to the nearest dollar), how much money would you need to deposit in the bank today, assuming that the bank account paid interest at the rate of 5% annually? $70,125 None of these are true $60,000 $45,560 $53,580 Explanation: Use the formula for Present Value: PV=FV(1+r)nPV =...

Q: If you had to select one criteria for choosing amongst projects, which would you select? or Q: Which criterion would you use if you could only choose one to choose between projects? Net Present Value Payback Internal Rate of Return Either Payback or Internal Rate of Return Return on Investment Explanation: NPV accounts for the time value of money, providing a clear indication of how much value a project will add in today’s dollars.

Q: Suppose Net Income = $200 , Depreciations = $10, and Working Capital went up by $70. What was Cash from Operations? or Q: Assume that working capital increased by $70, net income was $200, and depreciations were $10. Cash from Operations: What was it? $200 $260 $80 $280 $140 Explanation: Therefore, the Cash from Operations is $140. This represents the cash generated from operating activities after adjusting for non-cash expenses and changes in working capital.

Q: Suppose Net Income =$100, Depreciations = $20, and Working Capital increased by $30. What was Cash From Operations? or Q: Assume that working capital rose by $30, net income was $100, and depreciations were $20. Cash From Operations: What Was It? $100 $120 $80 $90 $140 $50 Explanation: Therefore, the Cash From Operations is $80. This indicates the cash generated from operating activities, taking into account the adjustments for non-cash expenses like depreciation and changes in working capital.

Q: Compare your optimal risky portfolio characteristics to those of the two individual stocks used in the portfolio. What do you find? or Q: Compare your optimal risky portfolio characteristics to those of the two individual stocks used in the portfolio. What do you discover? The optimal risky portfolio displays the same Sharpe Ratio as at least one of the two stocks used in the portfolio. The optimal risky portfolio displays a lower Sharpe Ratio than either of the two stocks used in the portfolio. The optimal risky portfolio displays a higher Sharpe Ratio than either of the two stocks used in the portfolio. Explanation: When constructing an optimal risky portfolio, the goal is to maximize the Sharpe Ratio by finding the best combination of assets to optimize the risk-return trade-off. This portfolio generally displays a higher Sharpe Ratio than either of the two individual stocks used in its construction. This result arises because diversification reduces the portfolio’s total ...

Q: Using the Solver technique described in Step 3.2, what more precise percentage of your investment would you allocate to WFC and MSFT, respectively, to arrive at a portfolio with the minimum variance? or Q: What more specific portion of your investment would you allocate to WFC and MSFT, respectively, using the Solver approach outlined in Step 3.2 in order to create a portfolio with the least amount of variance? 44.3%; 55.7% 44.7%; 55.3% 59.2%; 40.8% 55.3%; 44.7% Explanation: The answer here will depend on the input values in Solver, but if we assume Solver yields any of the given options, the closest approximation for minimum variance would likely be 44.3% in WFC and 55.7% in MSFT or 44.7% in WFC and 55.3% in MSFT .

Q: Using the estimation technique described in Step 3.1, what percentage of your investment would you allocate to WFC and MSFT, respectively, to arrive at a portfolio with the minimum variance? or Q: How much of your investment would you put into WFC and MSFT, respectively, using the estimating method outlined in Step 3.1 in order to create a portfolio with the least amount of variance? 60%; 40% 55%; 45% 45%; 55% 40%; 60% Explanation: If you’d like, I can help calculate this if you provide the variances (or standard deviations) and the covariance between WFC and MSFT. Otherwise, given these choices, it’s likely the answer is closest to 60% in WFC and 40% in MSFT , but verifying with data would be best for accuracy.

Q: This question relates to a comparison of the projects described in questions 5 and 8. Refer to the projects in questions 5 and 8. Which of the following best describes the actions you would take based on your analysis? or Q: The project descriptions in questions 5 and 8 are compared in this question. Please consult the projects mentioned in questions 5 and 8. Based on your analysis, which of the following best sums up what you would do? Accept both projects Reject both projects Reject the project in question 5 and accept the project in question 8 Accept the project in question 5 and reject the project in question 8 Explanation: Generally, projects with a positive NPV should be accepted, while those with a negative NPV should be rejected. Both projects have negative NPVs, indicating that neither project is expected to add value to the firm.Typically, if the IRR exceeds the company’s cost of capital, the project is acceptable. However, both projects have IRRs below the cost of c...

Q: Suppose your firm is considering investing in a project that requires an initial investment of $500,000 at Year 0, and returns cash flows at the end of Years 1 to 5 of $20,000, $40,000, $60,000, $80,000 and $350,000, respectively. Further, assume your company’s cost of capital is 8%. What is the internal rate of return of the project (round your IRR to the nearest tenth of a percent, e.g., 10.1%)? or Q: Let’s say your company is thinking of funding a project that would yield cash flows of $20,000, $40,000, $60,000, $80,000, and $350,000 at the end of Years 1 through 5, with an initial investment of $500,000 in Year 0. Additionally, suppose that the cost of capital for your business is 8%. How much is the project’s internal rate of return? Round it to the closest tenth of a percent, for example, 10.1%. None of these are true 9.4% 0.0% 7.9% 2.3% Explanation: The Internal Rate of Return (IRR) of the project, rounded to the nearest tenth of a percent, is 9.4% .

Q: Suppose your firm is considering investing in a project that requires an initial investment of $500,000 at Year 0, and returns cash flows at the end of Years 1 to 5 of $20,000, $40,000, $60,000, $80,000 and $350,000 respectively. Further, assume your company’s cost of capital is 8%. What is the net present value of the project (round to the nearest dollar)? or Q: Let’s say your company is thinking of funding a project that would yield cash flows of $20,000, $40,000, $60,000, $80,000, and $350,000 at the end of Years 1 through 5, with an initial investment of $500,000 in Year 0. Additionally, suppose that the cost of capital for your business is 8%. To the closest dollar, what is the project’s net present value? $0 $90,000 None of these are true -$25,552 -$102,551 Explanation: The NPV is approximately -$102,532 , which rounds to -$102,551 . Therefore, the correct answer is -$102,551 .

Q: Suppose your firm is considering investing in a project that requires an initial investment of $200,000 at Year 0, and returns cash flows at the end of Years 1 to 3 of $50,000, $100,000 and $150,000 respectively. Further, assume your company’s cost of capital is 15%. In what year does payback occur for the project? or Q: Let’s say your company is thinking of funding a project that would yield cash flows of $50,000, $100,000, and $150,000 at the end of Years 1 through 3, respectively, after requiring an initial expenditure of $200,000 in Year 0. Additionally, suppose that the cost of financing for your business is 15%. What year does the project pay for itself? Year 0 Year 3 Payback is never reached Year 2 Year 1 Explanation: The cumulative cash flow of $200,000 is reached during Year 3 , so the payback period occurs in Year 3 .

Q: Suppose your firm is considering investing in a project that requires an initial investment of $200,000 at Year 0, and returns cash flows at the end of Years 1 to 3 of $50,000, $100,000 and $150,000 respectively. Further, assume your company’s cost of capital is 15%. What is the internal rate of return of the project (round your IRR to the nearest tenth of a percent, e.g., 10.1%)? or Q: Let’s say your company is thinking of funding a project that would yield cash flows of $50,000, $100,000, and $150,000 at the end of Years 1 through 3, respectively, after requiring an initial expenditure of $200,000 in Year 0. Additionally, suppose that the cost of financing for your business is 15%. How much is the project’s internal rate of return? Round it to the closest tenth of a percent, for example, 10.1%. 15.0% None of these are true 24.1% 22.6% 19.4% Explanation: The Internal Rate of Return (IRR) is 22.6% , so the correct answer is 22.6% .

Q: Suppose your firm is considering investing in a project that requires an initial investment of $200,000 at Year 0, and returns cash flows at the end of Years 1 to 3 of $50,000, $100,000 and $150,000 respectively. Further, assume your company’s cost of capital is 15%. What is the net present value of the project (round to the nearest dollar)? or Q: Let’s say your company is thinking of funding a project that would yield cash flows of $50,000, $100,000, and $150,000 at the end of Years 1 through 3, respectively, after requiring an initial expenditure of $200,000 in Year 0. Additionally, suppose that the cost of financing for your business is 15%. To the closest dollar, what is the project’s net present value? None of these are true -$25,123 $17,720 $12,970 $100,000 Explanation: To calculate the Net Present Value (NPV) of the project, we need to determine the present value of the future cash flows and subtract the initial investment.

Q: Using the results you get from the Daily Returns quiz for DJIA, calculate the following summary statistic “Sharpe Ratio” of the return series (using the adjusted close return series). Write your answer as a number rounded to the nearest thousandth percentage point (e.g., you would write “0.073214” as “0.073”). or Q: Determine the return series’ “Sharpe Ratio” using the adjusted closing return series and the responses you received from the DJIA Daily Returns quiz. Your response should be written as a figure that has been rounded to the closest thousandth percentage point (for example, “0.073214” should be written as “0.073”). 0.048 Explanation: With the answer “0.048,” it seems you’ve already calculated the Sharpe Ratio as requested. This value, 0.048, is the ratio rounded to the nearest thousandth (0.048).

Q: Comparing the two optimal risky portfolios (one allowing short selling and the other long-only), what do you find regarding the Sharpe Ratios? or Q: What do you discover about the Sharpe Ratios when you compare the two ideal risky portfolios (one that permits short selling and the other that only permits long selling)? When short selling is allowed, the portfolio is able to attain a higher level of Sharpe Ratio When only long selling is allowed, the portfolio is able to attain a higher level of Sharpe Ratio The Sharpe Ratio is the same Explanation: When short selling is allowed, the portfolio typically has more flexibility to optimize the asset weights, often leading to a higher Sharpe Ratio . This is because short selling enables the portfolio to offset risks more effectively and leverage assets that offer the best return relative to risk.