Reference no: EM13870741
Security A has a 9% expected return, 65% standard deviation. Security B has a 7% return, 50% standard deviation.
a. Using standard deviation data alone, which security is considered more risky?
b. Using co-efficient of variation as your sole analysis, which is the best choice of Security?
c. How would you explain co-efficient of variation?
You are looking at investing in SML Industries stock. Risk free rate is 2%, rm is 11%, Beta is 1.2. Growth is 4%. Do is $3.00. Current price is $75
a. Using CAPM, what is the required return?
b. Using constant growth valuation, what is the expected return?
c. Should I buy this stock?
You have been asked to analyze the following potential project. The expected cash flow stream is $20,000 for year 1 with an expected 4% growth rate per year for the next 3 years.
a. If your cost of capital is 10%, how much would you be willing to invest in this 4 year project?
b. if the upfront cost of the project was $70,000, should you say yes to the project?
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Implementation plan for starbucks
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What is the probability that an investor in this stock
: Over the past five years, a stock produced returns of 14%, 22%, -16%, 2%, and 10%. What is the probability that an investor in this stock will NOT lose more than 8% nor earn more than 21% in any one given year?
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What is the expected return for the project
: What is the expected return for the project? If the required rate of return is 13%, should they proceed with the project? Why? Does this mean Project B is automatically eliminated from consideration?
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Using constant growth valuation formula-what is net income
: Blue Company has 12,000,000 in sales. COGS are 40% of sales. Operating costs are $1,200,000plus depreciation expense of $80,000 and interest expense $80,000. Tax rate is 40%. They have 1,000,000 shares of stock outstanding. What is their net income? ..
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Which security is considered more risky
: Security A has a 9% expected return, 65% standard deviation. Security B has a 7% return, 50% standard deviation. Using standard deviation data alone, which security is considered more risky? You are looking at investing in SML Industries stock. Risk ..
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What is the cost of equity
: Johnson Tire Distributors has an unlevered cost of capital of 13 percent, a tax rate of 34 percent, and expected earnings before interest and taxes of $1,700. The company has $3,200 in bonds outstanding that have a 6 percent coupon and pay interest a..
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Change in shareholders equity during year
: It is true that the change in shareholders’ equity during a year is equal to the change in net assets in that year. This equation is important because:
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What is the firms weighted average cost of capital
: A firm has debt of $90,000, equity of $140,000, a leveraged value of $100,000, a cost of debt of 6%, a cost of equity of 12%, and a tax rate of 40%. What is the firm's weighted average cost of capital?
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Project that has initial after-tax outlay or after-tax cost
: Geronimo, Inc. is considering a project that has an initial after-tax outlay or after-tax cost of $190,000. The respective future cash inflows from its four-year project for years 1 through 4 are: $50,000, $40,000, $70,000 and $45,000. Geronimo uses ..
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