Q: 1. RET has the following capital structure, which is considers to be optima: Debt 25%, preferred…
A: a) After Tax Cost of debt = Interest rate *(1-tax rate) = 12*(1-0.4) = 7.2% b) Cost of preferred…
Q: An insurance policy will pay a sum of $1 million when the insured reaches the age of 65. Mary, the…
A: Future Value $10,00,000.00 Time Period 28 Inflation Rate 3%
Q: Suppose you take out a 20-year mortgage for a house that costs $286,205. Assume the following: The…
A: Rule 28% says that any persons total housing expenses could not be greater than 28% of gross salary.…
Q: 3000.00 120.00 706.47 706.47 706.47 706.47 2293.53 C 120.00 A B 120.00 D 2205.32 794.68 0.00 120.00…
A: Sinking fund is amount being deposited each period to achieve the future value required in the…
Q: Suppose that we make contributions to a fund of $125 today and $750 in two years for a return of…
A: We have to write the NPV as function of the discount factor ν and then proceed to calculate the…
Q: Typewritten only and i'll upvote
A: In finance a financial outcome or a result is often dependent on some other factors and variables.…
Q: How much will the company pay in total if they are going to pay all these costs today? Interest for…
A: The amount the company will pay today can be found using the present value concept. By discounting…
Q: Reporting Land Acquisition for Cash and Mortgage Note on Statement of Cash Flows On the basis of the…
A: Cash flows from investing activities are those cash flows that specifies cash inflows and outflows…
Q: (Table: Car Costs) The table shows the initial cost outlays of two versions of the Ford Escape and…
A: NPV is the difference between Present Value of cash Inflows and Initial Investment. Project with…
Q: 4. Suppose a $1000 EOY loan payment was made today for money that was borrowed five years ago. If…
A: Loan payment is $1,000 made today Time period is five years Inflation rate is 2% To Find: Value of…
Q: Air just paid an annual dividend of 0.2 per share. Its dividend is expected to double for the next…
A: Dividends are the distribution of a percentage of a company's earnings to its shareholder class, as…
Q: Analysts projected that Apple will have earnings per share 2.5$. The industry has average PE ratio…
A: The stock price can be calculated on the basis of relative valuation metrics. The PE multiple can be…
Q: You are given the following information about Jordan plc: Financial position statement at January…
A: Corporate ax rate is 30% Yield on Treasury bills is 7% Equity beta is 1.21 Equity risk premium is…
Q: A family has a $134,345, 25-year mortgage at 5.1% compounded monthly. (A) Find the monthly payment…
A: Solution:- When a loan is taken, it is to be either repaid as a lump sum payment or in installments.…
Q: At a base sales level of R400,000, a firm has a degree of operating leverage of 2 and a degree of…
A: Sales level = R400,000 Degree of operating leverage = 2 Degree of financial leverage = 1.5
Q: has a debt ratio of 55% What is its debt/equity ratio?
A: Given, Debt ratio = 55% Equity ratio = ( 1 - Debt ratio) = 1 - 0.55 = 0.45
Q: What is the NPV at a discount rate of 12.4 percent
A: Initial cash outflow = $40,500 Cash inflows Year 1 = $16,450Year 2 = $17,800Year 3 = $16842 Discount…
Q: Shinn Co. sells custom markers for $3.00 apiece. The variable cost per marker is $0.83. Shinn has…
A: Solution: Degree of operating leverage (DOL) measures the ratio of a company's contribution margin…
Q: Suppose you plan on spending $100/ac on restoring a forest on bare land you plan to buy. The project…
A: Return means earning something over the invested amount. Investment is done to get some return from…
Q: b. Consider a car loan of $18 000 at 7.5% p.a. to be repaid over 6 years. i. Calculate the monthly…
A: Annuity refers to the fixed periodic payments made for the specified period of time. Present value…
Q: Suppose you take out a 30-year mortgage for a house that costs $303,023. Assume the following: The…
A: A mortgage is a loan taken that has to be repaid in equal periodic installments. The monthly amount…
Q: Average age of inventory of GLOBE STATEMENT OF FINANCIAL POSITION AND INCOME STATEMENT OF 3…
A: Average age of inventory is the time in days to sell off inventory. It can be calculated Average age…
Q: . Inflation is expected to average 2.4% per year for the next 44 yea /hat percentage of the…
A: There is decrease in purchasing power due to increase in inflation and over the years this effect is…
Q: ABC Inc. currently sells P12,000,000 per annum. Its credit period and DSO are both 30 days, and 1.5%…
A: Given, Old sales is P12,000,000 New sales increase by P3,000,000.
Q: The following perpetual sequences of revenues and costs are predicted for an acre of bare,…
A: The present value method is used to find the profitability of a project by adding up discounted cash…
Q: How much revenue should the vendor recognize immediately at the time of your original purchase
A: Purchase price = $3,000 Voucher value = $ 500 Probability of redemption (estimate) is 90%
Q: The risk-free rate is 3%, the market risk premium (MRP) is 8%, and the Beta of Lotsa Dough common…
A: Risk free rate = 3% Market risk premium = 8% Beta = 0.90
Q: Average collection period of JFC * STATEMENT OF FINANCIAL POSITION AND INCOME STATEMENT OF 3…
A: Given, The total sales of JFC is 90,671. Total receivables is 7621
Q: Given the following information, what is the financial break-even point? Initial investment =…
A: Given that: Fixed cost=$58000 price=$130 variable cost per unit=$95 Thus formula of financial break…
Q: Your employer offers a 401(k) plan with a 17% match, and you set a goal of retiring in 35 years with…
A: Given: Value today = $1.1 million or $1100000 Inflation rate = 1.5% Annual rate = 1.2% Number of…
Q: The price of a condominium is $88,000. The bank requires a 5% down payment and one point at the time…
A: Price of Condominium is $88,000 Down payment is 5% Time period is 30 years or 30×12 = 360 months…
Q: lden Bling, an aged jewellery distributor, issues dividends semi-annually. The most recent divided…
A: Recent Dividend = $0.90 Growth rate = 9% Cost of equity = 12% Special Dividend = $1.70
Q: Mergers often are classified according to the merger's participants and their lines of business.…
A: Mergers are a type of agreement where two or more companies decide to form a single entity.
Q: Woland National Bank purchases a three-year interest rate cap for a fee of 2 percent of notional…
A: LIBOR refers to the London Interbank Offered Rate. It is the interest rate at which the banks lend…
Q: Compute the monthly payments on a 3-year lease for a $28,427 car if the annual rate of depreciation…
A: Lease can be defined as the agreement between lessor and lessee where lessor gives lessee the right…
Q: 1. what is the approach of Pax World? 2. what is the Future Development Strategy and Planning of…
A: Pax World Funds is a collection of 11 funds advised by Impax Asset Management LLC, a sustainable…
Q: Suppsoe that you borrow $14,000 for five years at 7% toward the purchase of a car. Use PMT to find…
A: We have to find the monthly payment towards the loan and the total interest to be paid over the life…
Q: Operating cycle of PETRON * STATEMENT OF FINANCIAL POSITION AND INCOME STATEMENT OF 3 COMPANIES AS…
A: The formula for the calculation of operating cycle is as follows: Operating cycle of…
Q: I need some research gaps in the existing literature for the impact of covid-19 on the UK's supply…
A: From the initial step of acquiring raw materials through the ultimate delivery of the product or…
Q: Anna is buying a house seling for $265.000. To oblain the morigage Anna la required to make a 10%…
A: 1) Down-payment = House Price * 10% = 265,000 * 10% = 26,500 2) Mortgage Loan = House Price -…
Q: LCT Computers is listed on the Alternative Investment Market (AIM) at the London Stock Exchange. The…
A: As per the Constant Dividend Growth Model, the cost of equity is: (D1/P0) + g where D1 is the…
Q: If Project A and Project B are independent, which project should be undertaken? PLEASE ANSWER THE…
A: Independent projects are those available set of investment alternatives who are not related to each…
Q: On May 6, May Payment makes a purchase of $258.50 on her credit card. The purchase appears on her…
A: A credit card is a pay later facility where banks pay on behalf of customers at the time of purchase…
Q: You have a 30-Year mortgage loan for $300,000 with an interest rate of 6% If you want to pay off…
A: First, we need to calculate annual repayment: Solved using Financial Calculator N = 30 I/Y = 6 PV =…
Q: How does an increase in price of share of acquiring company affect the value to the target in…
A: The increase in price of the share of acquiring company and its effect on the value of stock of…
Q: Describe the following stakeholders’ objectives and what a financial manager needs to be mindful of…
A: Stakeholders can be defined as the group of people or entities who are likely to use the financial…
Q: What is the present value of a stream of monthly payments of $500 each over 10 years, if the…
A: Monthly payment (P) = $500 Interest rate = 10% Monthly interest rate (r) = 10%/12 =…
Q: Machine A Machine B R100 000 R110 000 Initial cost 5 years 5 years Expected economic life R10 000 0.…
A: Payback period- It represents the time period required for recovery of the initial investment made…
Q: If 1-year interest rates for the next three years are expected to be 6, 4, and 5 percent, and the…
A: The liquidity premium theory is one of the theories that attempts to explain the term structure of…
Q: How much money (to the nearest dollar) will you need to deposit in an account now in order to have…
A: r = 1.2% interest compounded weekly k( discount rate per week) = 1.2/52 = 0.02307692% N = 5 years *…
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- IBM AMZN E(R) 0.07 0.11 Standard Deviation0.10 0.18 Correlation0.45 Suppose you have the above data on IBM and Amazon, compute the expected return and the standard deviation of an equally weighted portfolio invested in the two securitiesis there a diversification benefit? Please show your work and round to at least 3 decimal placesQuestion 7 The Amelia Knight investment fund has a total capital of R120 000 invested in three shares: SharesReturnInvestedTechnological Sector25%R60 000Education Sector13%R30 000Mining Sector20%R30 000 The current risk-free rate is 5,5%. Market returns have the following estimated probability distribution for the next period: ProbabilityMarket return0,3–10%0,1 14%0,2 15%0,4 18% What is the beta coefficient of the investment fund? 1. 0,52 2. 0,80 3. 1,82 4. 4,92Quantitative Problem: You are given the following probability distribution for CHC Enterprises: State of Economy Probability Rate of return Strong 0.25 18 % Normal 0.55 8 % Weak 0.20 -6 % Using excel: What is the stock's expected return? Do not round intermediate calculations. Round your answer to two decimal places. % What is the stock's standard deviation? Do not round intermediate calculations. Round your answer to two decimal places. % What is the stock's coefficient of variation? Do not round intermediate calculations. Round your answer to two decimal places.
- . E(RI) = .15(.11) + .55(.18) + .30(.08) Using CAPM to determine the expected rate of return for risky assets, consider the following example stocks, assuming that you have already compute the betas Stock Beta WND 0.80 STA 1.35 CTE 1.15 DUY 1.20 EVN -0.20 Stock WND the economy’s RFR to be 6 percent (0.06) and the expected return on the market portfolio (E(RM)) to be 8 percent (0.08) Stock STA, the economy’s RFR to be 5percent (0.05) and the expected return on the market portfolio (E(RM)) to be 7 percent(0.07) Assume that all the other stocks is as follows since we expect the economy’s RFR to be 5 percent (0.05) and the expected return on the market portfolio (E(RM)) to be 9 percent (0.09),QUESTION 6 Calculate the expected return for C Inc., which has a beta of 0.8 when the risk-free rate is 0.04 and you expect the market return to be 0.12. a. 8.10 percent b. 9.60 percent c. 10.40 percent d. 11.20 percent e. 12.60 percentHere are data on two companies. The T-bill rate is 4% and the market risk premium is 6%. Company $1 Discount Store Everything $5 Forecast return 12% 11% Standard deviation of returns 8% 10% Beta 1.5 1.0 What would be the fair return for $1 Discount Store according to the capital asset pricing model (CAPM)? Enter your answer as a decimal.
- Calculate the union’s cost of equity from the CAPM using its own beta (0.90) estimate and the industry beta (1.25) estimate. How different are your answers? Assume a risk-free rate of 2% and a market risk premium of 7%. Can you be confident that Union Pacific’s true beta is not the industry average?Quantitative Problem: You are given the following probability distribution for CHC Enterprises: State of Economy Probability Rate of return Strong 0.25 18% Normal 0.45 8% Weak 0.30 -6% What is the stock's expected return? Do not round intermediate calculations. Round your answer to two decimal places. ? % What is the stock's standard deviation? Do not round intermediate calculations. Round your answer to two decimal places. ? % What is the stock's coefficient of variation? Do not round intermediate calculations. Round your answer to two decimal places. ?Here are data on two companies. The T-bill rate is 4% and the market risk premium is 6%. Company $1 Discount Store Everything $5 Forecasted return 12% 11% Standard deviation of returns 8% 10% Beta 1.5 1.0 What would be the fair return for each company according to the capital asset pricing model (CAPM)?
- 11-6 The current risk-free rate of return, rRF, is 4 percent and the market risk pre- mium, RPM, is 5 percent. If the beta coefficient associated with a firm’s stock is 2.0, what should be the stock’s required rate of return? 11-7 If the risk-free rate of return, rRF, is 4 percent and the market return, rM, is expected to be 12 percent, what is the required rate of return for a stock with a beta, , equal to 2.5?Question content area top Part 1 Use the information for the question(s) below. Consider an economy with two types of firms, S and I. S firms always move together, but I firms move independently of each other. For both types of firm there is a 70% probability that the firm will have a 20% return and a 30% probability that the firm will have a -30% return. The standard deviation for the return on a portfolio of 20 type S firms is closest to: Question content area bottom Part 1 A. 23.0%. B. 5.10%. C. 5.25%. D. 15.0%.QH. The data for the two companies X and Y are as follows: X Y Return 20% 23% Risk ( SD) 21% 25% r 0.4 Find the portfolio risk if 50% of funds is allocated for each. Determine the correlation coefficient that would be necessary to reduce the level of portfolio risk by 25%.