1. What would the toll fee have to be on a new highway to pay for the cost of the highway and make 5%/year on the investment if the highway costs $80 MM, the maintenance fees are $2 MM and it is estimated that 300,000 drivers will use the highway per year (assume an infinite life)?
2. You’ve observed the following returns on Crash-n-Burn Computer’s stock over the past five years: 14 percent, –14 percent, 16 percent, 26 percent, and 10 percent.
1. What was the variance of Crash-n-Burn’s returns over this period? Round answer to 5 decimal places.
3. Critically analyze the Efficient Market Hypothesis and Behavioral Finance. In your opinion, which one presents a more realistic description of the capital markets? Why?