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Economics
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Question:

Habib Group is a Pakistani multinational conglomerate operates in the following lines of business with segment revenue (as a percentage of total revenue): Apparel: 30% Health Care Equipment: 30% Media: 25% Energy: 28% What is the sector classification for this group, based on the Global Industry Classification Standard

Since media and apparel are part of consumer discretionary, therefore, adding both revenues will give the max percentage from this sector than others. Consumer disc 55% Health-care 30 Energy 28 Therefore, consumer discretionary is the answer.

Corporate Finance
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Question:

Honda Motors is evaluating a new piece of equipment that will automatically install power windows in cars coming off the production line. The equipment cost is \$3.5 million, and the firm estimates that the present value of the annual cost savings from installing the equipment is \$2.8 million. The production manager is also considering purchasing a module that will allow the equipment to be used for Honda's SUV production. The additional module represents a real option with a cost of \$1.1 million dollars. The production manager estimates that adding the module would give Honda cost savings of an additional \$2.0 million. What is the profitability of the project before and after considering the real option?

The profitability of the project before considering the real option is the difference between the cost savings and the cost of the equipment, or 2.8M-3.5M= \$700,000. The profitability of the project after considering the real option = NPV (based on the project alone) cost of option + value of the option. The cost of the option is \$1.1 million, while the value of the option is \$2.0 million. Profitability after option = 0.7M-1.1M+2.0M = \$200,000.

Finance
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Question:

John is an investor and he buys a share at the beginning of the year 2X10 (t=0) for \$135. At the end of the year 2X10 (t=1), he buys another share at the market value of \$160. Both the shares give the dividend of \$4 per share during this year. At the end of year 2X11 (t=2), John sells both the shares for \$210 each. Calculate the annual time-weighted rate of return of John’s investment.

Step 1: There are two holding periods in this question. Holding period 1: Value at the beginning of 2X10=\$135 Dividends paid= \$4 Value at the end of 2X10=160 Holding period 2: Value at the beginning of 2X11=\$320 (two shares @ \$160 each) Dividends paid= \$8 (two shares@ \$4 each) Value at the end of 2X10= \$420 Step 2: Calculate the HPR HPR 1: [(160+4)/135]-1=21% HPR 2: [(420+8)/320]-1=33.75% Step 3: Calculate annual time weighted rate of return: (1+time weighted rate of return)^2 = (1.21)(1.3375)= 27.22%

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