I need help project evaluation- financial management?
Question:
A 0.2 16% 12 %
B 0.4 18% 11%
C 0.2 20% 10%
D 0.1 22% 9%
E 0.1 4% 8%
Risk free rate of interest is 9% PA. is the proposed investment acceptabe??
SHOW ME DA WAY.PLS
Answer:
I'm not sure of your data, but I know this, if you are talking about investments and include "risk free rate of interest" and 9 percent together in the same sentence, you are at risk of disappointment.
You need other information. If you want low risk, you will get the inverse relationship to interest rates. Higher rates are there because of higher risk. The exception is in trust annuities, where the higher rates are safely offered because of the higher risk of your mortality--whereupon the company gets to keep more of your money because you died, since they are usually sold to the elderly for retirement income.
More Questions & Answers...