University of Melbourne

It is the end of your final year of study as a student in the Master of Finance program and you are  trying to determine what you are going to do over the remaining 35 years of your working life. You  are trying to decide whether you should remain at university and do your PhD in finance or  alternatively leave university and become a consultant.     You anticipate that it will take you 5 years to complete your PhD during which time you will earn a  real net cash flow of $25,000 p.a. At the end of these 5 years you must decide whether to remain at  the university as an academic or take up a career as a consultant.  There is a 10% chance that you will  enjoy great success as an academic earning a salary of  $85,000 p.a., a 50% chance that you will have  a moderately successful career earning a salary of $65,000 p.a. and a 40% chance that you will have  an unsuccessful academic career earning a salary of only $45,000 p.a. If you decide to become a  consultant then it will initially cost you $100,000 to set up your business and there is an 80% chance  of generating $60,000 p.a. and a 20% chance of generating $120,000 p.a..    If you decide not do a PhD and instead become a consultant immediately, there is a 60% chance that  you will earn $70,000 p.a. and a 40% chance that you will earn $50,000 p.a. over the remainder of  your working life. Assume that all cash flows (other than those specified otherwise) occur at year-end, are expressed in real terms (that is in terms of purchasing power today) and that the real opportunity cost of capital is 10%.  Draw the decision tree relating to this problem.

reword clearer Further studies that utilise different methods to study causality between M1 activity and MR is required to develop the findings of this study as it is useful for research into brain activation patterns providing useful knowledge on thinking and behaviour.

reword clearer: Of note, the study we conducted included a sound methodology which, despite prior research implicating M1 in MR ours enhances the evidence for a causal association between M1 activity and mental rotation tasks.

Your analysis of LMB Ltdís shares indicates that the company is not expected to pay any dividends for the next three years. It is then likely to pay a dividend of $2.00 at the end of year 4, which is expected to grow at a rate of 10% p.a. for the next two years. Subsequently, these dividends are expected to grow at a rate of 5% p.a. for the foreseeable future. If investors require a return of 10% p.a. on LMB Ltdís shares, the companyís share price today should be closest to: A. $28.70. B. $32.80. C. $37.80. D. $50.80.

Market analysts expect the earnings per share of PLK Ltd to be $2.00 next year. The company has typically retained 40% of its earnings and this policy is expected to continue in the foreseeable future. Assume that investors require a return of 8% p.a. on this company and that its shares are currently trading at $40.00 per share. Based on this information, the implied annual growth rate of PLKís dividends is closest to: A. 2.0%. B. 3.0%. C. 5.0%. D. 6.0%.

Your friendís credit card charges an interest rate of 2.0% per month on the monthly balance outstanding. She has a current (that is, month 0) balance of $10,000 and she wants to start paying off this balance. If she can only afford to pay off $600 per month the balance on her credit card at the end of one year will be closest to: A. $2,800. B. $4,635. C. $8,047. D. $12,682.