Mrs Gomez has a portfolio with an expected return of 7%. The portfolio is evenly invested in a stock and a risk-free asset. The market has an expected return of 12% and the risk-free asset has an expected return of 4%. What is the beta of the stock? a) 0.50 b) 0.75 Od 1.00
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- Suppose that a new machine tool having a usetul ife of onty one year costs $80.000 Suppose, atso, that the net additional revenue resulting thom buying this tool isexpected to be $12.000. The expected rote of return on this tool is Multiple Choice 40 percent 60 percent 30 percent 12 percentA firm is considering purchasing equipment to manufacture a new product. The equipment will cost $3M, and expected net cash inflowsare $0.35M indefinitely. If market demand for theproduct is low, then over the next five years thefirm will have the option of discarding the equipment on a secondary market for $2.2M. Assume thatMARR = 12%, s = 50%, and r = 6%. What isthe value of this investment opportunity for the firm?You are financial analyst for the XYZ company. The director has asked you to analyze two proposed capital investments, Project A and Project B. Each project has a cost of RM 10, 000, and the cost of capital for each project is 12 percent. The project s’ cash flows are as follows: Year Expected Net Cash Flows Project A Project B 0 (10,000) (10,000) 1 6500 3500 2 3000 3500 3 3000 3500 4 1000 3500 Calculate each project’s NPV. Which project or projects should be accepted?
- SHOW IN EXCEL SHOW EACH PROCESS IN EXCEL Gasoline EV Purchase Cost $50,000 $80,000 Annual - Maintenance $5,000 $2,500 Annual Fuel $7,500 $3,000 Service Life Probability Service Life Probability 55% 52% 6 10% 65% 7 25% 7 10% 8 35 % 8 25% 9 20% 9 50 % 10 5 % 10 8% a) (5 Points) What is the expected value of the present worth and expected value of the standard deviation of each option? b) (5 Points) Which option should be chosen, and why? c) (5 Points) If the company' s MARR is 20%, which option would they choose and why? d) (5 Points) What value of the MARR makes the company indifferent between choosing gasoline or electric vehicles?33 TB MC Qu. 12-82 A stock had annual returns of... A stock had annual returns of 5.5 percent, -12 percent, and 15.5 percent for the past thr of returns for this stock? 56.65% 6.94% 1.94%Question 20 A decision tree of a project is given as follows: A1 S8 What is the expected value of alternative B? 0.5 27 O a. $5.0 EMV-7.5 A2 O b. 55.2 0.5 O. S0 $15 O d. 54.5 .73 $4 0.45 $10 0,55 so
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