# Question

Portfolio managers are frequently paid a proportion of the funds under management. Suppose you manage a $100 million equity portfolio offering a dividend yield (DIV1 / P0 of 5%. Dividends and portfolio value are expected to grow at a constant rate. Your annual fee for managing this portfolio is .5% of portfolio value and is calculated at the end of each year. Assuming that you will continue to manage the portfolio from now to eternity, what is the present value of the management contract? How would the contract value change if you invested in stocks with a 4% yield?

## Answer to relevant Questions

Suppose the concatenator division, which we valued based on Table, is spun off as an independent company, Concatco, with 1 million shares of common stock outstanding. What would each share sell for? Before answering, notice ...Consider the following projects:a. If the opportunity cost of capital is 10%, which projects have a positive NPV?b. Calculate the payback period for each project.c. Which project(s) would a firm using the payback rule ...Machines A and B are mutually exclusive and are expected to produce the following real cash flows:The real opportunity cost of capital is 10%.a. Calculate the NPV of each machine.b. Calculate the equivalent annual cash flow ...In December 2005 Mid-American Energy brought online one of the largest wind farms in the world. It cost an estimated $386 million and the 257 turbines have a total capacity of 360.5 megawatts (mW). Wind speeds fluctuate and ...Table shows standard deviations and correlation coefficients for eight stocks from different countries. Calculate the variance of a portfolio with equal investments in eachstock.Post your question

0