Determine, using Capital Assets Pricing Model (CAPM), the Expected Rate of Return Risk free rate was 10% and Market return was 15% Asset H : return: 18%, beta: 1.4
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- What is the profitability index for an investment with the following cash flows given a 20 percent required return? Year Cash Flow 0 -$21,000.00 1 $7,200.00 2 $9,300.00 3 $8,500.00Compute the Payback Period, Discounted Payback Period, Net Present Value, Internal Rate of Return, and Productivity Index of all four alternatives based on cash flow. use 10 percent for the cost of capital in the calculations. For the Payback Period and for the Discounted Payback Period, compute to the midyear points. ALL Information is in the PNGs!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!CONSIDERING THAT: You want to make an initial investment of $100,000, and maintain a constant weighting of 40% for asset 1 and 60% for asset 2. CALCULATE: What would be the average rate of return on asset 1? What would be the average rate of return on asset 2? What would be the average rate of return of the portafolio?
- Using Capital Asset Pricing Method (CAPM), compute for the cost of capital (equity) with risk-free rate of 4%, market return of 8% and Beta of 1.75 a. 13.00% b. 12.00% c. 11.00% d. 10.00%You must choose between two investments, G and W. The profitability index (PI), net present value (NPV) and internal rate of return (IRR) of the two investments are as follows: Criteria Investment G Investment W NPV –12 000 40 000 PI 0,985 1,053 IRR 20% 24% Which investment(s) should you choose, considering all the above criteria, if the cost of capital is equal to 21% per yearABC Company is using net present value analysis at various discount rates in order to determine the internal rate of return of an investment proposal. NPV using a discount rate of 12 percent = $2,095 NPV using a discount rate of 14 percent = $(2,108) By interpolating these results, an approximate internal rate of return on the investment is estimated to be percent. (Round your answer to the nearest whole percentage.)
- An investment project has an initial cost of $260 and cash flows $75, $105, $100, and $50 for years 1 to 4 respectively. The cost of capital is 12%. What is the discounted payback period?A company wanted to invest in a project which requires an initial investment of ₱10,000 and discounting rate of 10% and will yield yearly cash flows as follows: Year 1, ₱2,000; Year 2, ₱7,000 and Year 3, ₱6,000. So, we will find out the Profitability Index by using the formula, PV of the cash flow = FV/ (1+i) ^n. - Calculate PV of the cash flow for Year 1 of investment. -Calculate PV of the cash flow for Year 2 of investment. -Calculate PV of the cash flow for Year 3 of investment. -How much is the total PV of future cash flow of the investment? -Find the Profitability Index of the investment.Compute the discounted payback statistic for project C if the appropriate cost of capital is 7% and the maximum discounted payback period is three yrs. Cash flow 0yr -$1400. 1yr $640. 2yr $600. 3yr $640 What is the discounted payback period ? Yesrs.
- Calculate/estimate the IRR(s) for a 6-year project with the following cash flows: CF0 = -50, CF1 =28 = CF2 = CF3 = CF4 = CF5, and CF6 = -93. In Excel, plot the NPV (= Y axis) against r (= discountrate), using r = 0%, 2%, and so on until you find all IRRs in the chart. Identify/estimate all IRRs.Consider a position consisting of a $100,000 investment in asset A and a $100,000 investment in asset B. Assume that the daily volatilities of both assets are 1% and that the coefficient of correlation between their returns is 0.3. What is the 5-day 99% VaR for the portfolio?Asset P has a beta of 0.9. The risk-free rate of return is 8 percent, while the return on the market portfolio of assets is 14 percent. The asset's required rate of return is