Option 1 Option 2 Option 3 Compute Total Expected Return for all of the options below...

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Option 1 Option 2 Option 3 Compute Total Expected Return for all of the options below in order to gain $20,000 (3 points each option) Issue stock today for $15,000 and the rest of the $5,000 is borrowed (9% interest) 60% chance of receiving $17,000 in one year 25% chance of receiving $25,000 in one year 15% chance of receiving $54,000 in one year Borrow $15,000 today (9% interest) and $5,000 in equity 60% chance of receiving $17,000 in one year 25% chance of receiving $25,000 in one year 15% chance of receiving $54,000 in one year Issue $20,000 stock today 60% chance of receiving $17,000 in one year 25% chance of receiving $25,000 in one year 15% chance of receiving $54,000 in one year Option 1 Option 2 Option 3 Compute Total Expected Return for all of the options below in order to gain $20,000 (3 points each option) Issue stock today for $15,000 and the rest of the $5,000 is borrowed (9% interest) 60% chance of receiving $17,000 in one year 25% chance of receiving $25,000 in one year 15% chance of receiving $54,000 in one year Borrow $15,000 today (9% interest) and $5,000 in equity 60% chance of receiving $17,000 in one year 25% chance of receiving $25,000 in one year 15% chance of receiving $54,000 in one year Issue $20,000 stock today 60% chance of receiving $17,000 in one year 25% chance of receiving $25,000 in one year 15% chance of receiving $54,000 in one year

Answer rating: 100% (QA)

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