User Account

All Pages

Calculate the expected rate of return on investments x and

Assignment Help Finance Basics
Reference no: EM13571948

Douglas Keel, a financial analyst for Orange Industries, wishes to estimate the rate of return for two similar-risk investments, X and Y. Douglas's research indicates that the immediate past returns will serve as reasonable estimates of future returns. A year earlier, investment X had a market value of $20,000; investment Y had a market value of $55,000. During the year, investment X generated cash flow of $1,500 and investment Y generated cash flow of $6,800. The current market values of investments X and Y are $21,000 and $55,000, respectively.

a. Calculate the expected rate of return on investments X and Y using the most recent year's data.

b. Assuming that the two investments are equally risky, which one should Douglas recommend? Why?

Reference no: EM13571948

Questions Cloud

During may all direct materials are transferred from : the inventory at may 1 and the costs charged to work in process-department b during may for stella company are as
Claypools personnel counted the inventory on hand and : clay pooll hardwares is only hardware store in a remote area of northern minnesota. some of claypools tranactions
She is willing to invest a lump sum today and leave the : misty needs to have 15000 at the end of 5 years to fulfill her goal of purchasing a small sailboat. she is willing to
Some people prefer to take a position in a company and work : some people prefer to take a position in a company and work for the company. other people think it is better to go into
Calculate the expected rate of return on investments x and : douglas keel a financial analyst for orange industries wishes to estimate the rate of return for two similar-risk
Your broker offers you the opportunity to purchase a bond : your broker offers you the opportunity to purchase a bond with coupon payments of 90 per year and a face value of
Calculate the increase in company profits if the jymp : foto company manufactures and sells a product called jymp. results from last year from the sale of jymp appear
On december 28 2013 videotech corporation vtc purchased 10 : on december 28 2013 videotech corporation vtc purchased 10 units of a new satellite uplink system from tristar
Anita vasquez received 240000 from her mothers estate she : anita vasquez received 240000 from her mothers estate. she placed the funds into the hands of a broker who purchased

Reviews

Write a Review

Finance Basics Questions & Answers

  Describe and evaluate the following four investments

Describe and evaluate the following four investments for consideration in any investment portfolio: Bonds--corporate and municipal, Stocks--common and preferred, Mutual funds, & Derivatives.

  Rentz corporation is investigating the optimal level of

rentz corporation is investigating the optimal level of current assets for the coming year. management expects sales to

  Determine the price to maximize revenues

Suppose you are a manager at the DaimlerChrysler. Daimler-Chrysler has lost fund on the Smart car since 1st model rolled off the assembly line in 1998.

  How she could unlever her shares of stocks

Suppose Zombie does convert, but Ms. Spears prefers the current all-equity capital structure. Show how she could unlever her shares of stocks to recreate the original capital structure.

  Describes why firms produce financial statements

Which of the following best describes why firms produce financial statements?

  Calculate the firms operating cycle calculate the firms

cash conversion cycle american products is concerned about managing cash efficiently. on the average inventories have

  Objective type questions on capital budgeting

Objective type questions on capital budgeting and When evaluating a capital budgeting project the change in net working capital

  If the price level recently fell by 5 in canada whilenbsp

1. the current exchange rate between canada and britain is 0.5268 per canadian dollar. the three month forward rate

  What is the estimated required return using capm approach

What is the estimated required return "r" using the dividend constant growth approach?

  What stock price is expected one year from now

Wrecks Tire Manufacturing's stock currently sells for $48 per share. The stock just paid a dividend of $2.23 per share this morning, and the dividend is expected to grow forever at a constant rate of 4% per year. What stock price is expected one y..

  What is the profitability index

ABC is reviewing a project that will cost $2,081.The project will produce cash flows $594 at the end of each year for the first two years and $784 at the end of each year for the next three years. What is the profitability index? Assume interest rate..

  Compute the net proceeds to houston corp

What rate of return must be earned on the net proceeds so that no dilution of earnings per occurs?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd