On what amount will he be required to pay taxes by us law

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Question: 1. Robin owns a business and is thinking of expanding her operations to other cities. The expansion will require an investment of $600,000 today. But, it will generate extra income of $120,000 each year for the next 8 years. Robin's required return on investment is 10 percent. What is the net present value NPV of this investment? Should Robin expand?

2. Sharmila holds a stock with an expected return of 15 percent. The risk-free rate is 5 percent. What risk premium will Sharmila earn by holding this stock? Assume the stock is as risky as the market.

3. Mohammed purchased a house for $150,000 and spent $50,000 to renovate it. He lived in the house for 10 years and can sell it today for $500,000. On what amount will he be required to pay taxes by US law?

4. Efuru believes that anyone who holds the stock of PYK Co. should cam a risk premium of 4 percent. If the risk-free rate is 2.5 percent, what return is Euro expecting? Assume the stock is as risky as the market.

Reference no: EM132074745

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