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Use the basic equation for the capital asset pricing model (CAPM?) to work each of the following problems:
1) Find the required return for an asset with a beta of 0.90 when the? risk-free rate and market return are 8% and 12% respectivley
2) Find the ?risk-free rate for a firm with a required return of 15.000% and a beta of 1.25 when the market return is 14%
3) Find the market return for an asset with a required return of 15.996% and a beta of 1.10 when the risk free rate is 9%
4) Find the beta for an asset with a required return of 15.000% when the risk free rate and market return are 10% and 12.5% resepectively
Aerotron Electronics is considering purchasing a water filtration system to assist in circuit board manufacturing. The system costs $40,000. It has an expected life of 7 years, at which time its salvage value will be $7,500. hat is the IRR of this in..
Walker Machine Tools has 6.6 million shares of common stock outstanding. The current market price of Walker common stock is $74 per share rights-on. The company’s net income this year is $23.00 million. What are the earnings per share and price-earni..
Thorpe Mfg., Inc., is currently operating at only 86 percent of fixed asset capacity. Current sales are $710,000. Suppose fixed assets are $600,000 and sales are projected to grow to $834,000. How much in new fixed assets is required to support this ..
Using the following certainty equivalent coefficients (CECs) and risk-free interest rate 6%, compute the certainty equivalent NPV (E(NPV)):CEC1 = 0.8, CEC2 = 0.8, CEC3 = 0.6, and CEC4 = 0.6.
Assume the Black-Scholes framework. The continuously compounded risk-free interest rate is r is unknown, but for a non-dividend paying stock S we know: Calculate r
The owner of a bicycle repair shop forecasts revenues of $228,000 a year. Variable costs will be $67,000, and rental costs for the shop are $47,000 a year. Depreciation on the repair tools will be $27,000. The tax rate is 30%. a. Calculate operating ..
Crosby Industries has a debt-equity ratio of 1.6. Its WACC is 10 percent, and its cost of debt is 7 percent. There is no corporate tax. What is Crosby’s cost of equity capital? What would the cost of equity be if the debt-equity ratio were 0.4? What ..
Determine the IRR on the following projects: Initial outlay of $35,000 with an after-tax cash flow at the end of the year of $5,836 for seven years. Initial outlay of $350,000 with an after-tax cash flow at the end of the year of $70,000 for seven ye..
You have been asked to estimate the value of General Communications, a telecomm firm. General Communications has a debt to capital ratio of 30%, a beta of 1.10 and a pre-tax cost of debt of 7.5%. Assuming that the firm is in stable growth, and that ..
Compare the progress from 1998 to 2003 of students in your state with the progress of students in one other state.
Consider a stock that is not planning to pay a dividend until 10 years from now. The first dividend paid (D11) will be $2. After that, the company will maintain a constant dividend growth rate of 5% forever. What is the value of the stock in 10 years..
Box plc is considering the acquisition of Circle plc. The former is valued at £100m and the latter at £50m by the market. What is the present value of the gain form the merger? If a cash offer of £70m is accepted by Circle's shareholders what is the ..
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