Calculate the required rate of return

Assignment Help Financial Management

Reference no: EM131014763

Calculate the required rate of return for Manning Enterprises assuming that investors expect a 4.5% rate of inflation in the future. The real risk-free rate is 1.5%, and the market risk premium is 3.5%. Manning has a beta of 2, and its realized rate of return has averaged 14% over the last 5 years. Round your answer to two decimal places

Reference no: EM131014763

Questions Cloud

Required return exceed farleys required return : Bradford Manufacturing Company has a beta of 1.9, while Farley Industries has a beta of 0.75. The required return on an index fund that holds the entire stock market is 8.5%. The risk-free rate of interest is 6.75%. By how much does Bradford's requir..

Two different bonds currently outstanding : The Morgan Corporation has two different bonds currently outstanding. Bond M has a face value of $60,000 and matures in 20 years. The bond makes no payments for the first six years, then pays $2,700 every six months over the subsequent eight years, a..

Bonds are considered to be risk-free assets : Risk-free assets. Government bonds are considered to be 'risk-free' assets. Why, then, do they give a return? Are they truly completely free of risk? On January 27, 2010, Steve Jobs took the stage to announce, as expected, a new addition to the Apple..

Educational level for adults in a community : The mean (m) educational level for adults in a community is reported as 10.45 years of school completed with a standard deviation (s ) of 3.8. Responses to a questionnaire by a sample of 40 adult community resi- dents indicate a mean ed..

Calculate the required rate of return : Calculate the required rate of return for Manning Enterprises assuming that investors expect a 4.5% rate of inflation in the future. The real risk-free rate is 1.5%, and the market risk premium is 3.5%. Manning has a beta of 2, and its realized rate ..

What practical effect would this have were your organization : Why is it important for Human Resource management to move from an operational and administrative role to a strategic role? What practical effect would this have were your organization (it can be a private sector company) to make this transition

Important concept in the capital budgeting process : What is opportunity cost and why is it an important concept in the capital budgeting process? The opportunity cost concept applies to almost every financial decision we make as individuals. Can you give an example from your own experience? What is th..

Theories of capital structure the cost of equity rises : In each of the theories of capital structure the cost of equity rises as the amount of debt increases. So why don't financial managers use as little debt as possible to keep the cost of equity down? After all, isn't the goal of the firm to maximize s..

Give the value and the type of each expression : The Hogwarts School was so happy with your math helper program that they referred you to a security firm! This security firm creates pin code door lockers like you see in the movies.

User Account

All Pages