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STEP: 2 of 3 Suppose that Alexander Co, a U.S.-based MNC, is trying to decide the location of a new project in which the

Posted: Wed Mar 30, 2022 3:49 pm
by answerhappygod
Step 2 Of 3 Suppose That Alexander Co A U S Based Mnc Is Trying To Decide The Location Of A New Project In Which The 1
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Step 2 Of 3 Suppose That Alexander Co A U S Based Mnc Is Trying To Decide The Location Of A New Project In Which The 2
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Step 2 Of 3 Suppose That Alexander Co A U S Based Mnc Is Trying To Decide The Location Of A New Project In Which The 3
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I cant make it much clearer, the last 2 pictures are just showing the answer choices for the blanks. the full question is picture 1.
STEP: 2 of 3 Suppose that Alexander Co, a U.S.-based MNC, is trying to decide the location of a new project in which they plan to invest. Alexander can invest in the new project in either the United States or Germany. Upon completion, the project will comprise 50,00% of Alexander's total invested funds, with the remaining 50.00% being invested in the United States. Forecasted Information regarding the proposed project over a 5-year period, including the 50.00% of funds invested in the existing business, are shown in the following table: Existing Business 20.00% Characteristics of Proposed Project Located in Located in United States Germany 30.00% 30.00% 0.06 0.1 0.1 Mean expected annual return on investment (after taxes) Standard deviation of expected annual after-tax returns on Investment Correlation of expected annual aftertax returns on investment with aftertax returns of existing U.S. business 0.8 0.02 In the previous stage of this problem you found that the expected returns for either portfolio - the potential portfolio with the Germany-based project and the potential portfolio with the U.S.-based project - were identical. Thus, Alexander wishes to analyze the risk involved with investing in each of the projects, as measured by the variance of their overall portfolio under each scenario. If Alexander Invests in the Germany If Alexander invests in the U.S.-based project, the overall variance of their portfolio would be based project, the overall variance of their portfolio would be
0.0078 0.0058 this problem you found that the expected returns for either portfolio htial portfolio with the Germany-based project o with the U.S.-based project - were identical. Thus, Alexander wishe 0.0018 ke the risk involved with investing in each of d by the variance of their overall portfolio under each scenario. 0.0023 pe U.S.-based project, the overall variance of their portfolio would be If Alexander invests in the Germany lil variance of their portfolio would be
0.0021 In the previous stage of this problem you found that the exped s for either portfolio - the potential portfolio with the Germany-based pre and the potential portfolio with the U.S.-based project - were 0.0081 Thus, Alexander wishes to analyze the risk Involved with investing in each the projects, as measured by the variance of their overall port 0.0031 each scenario. 0.0051 Jair portfolio would be 18 Alexander invests in the Germany- If Alexander invests in the U.S.-based project, the overall vari based project, the overall variance of their portfolio would be