Calculate the expected rate of return on investments

Reference no: EM13235385

Rate of return 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: EM13235385

Questions Cloud

Differ in african cultures compared to western culture : How does a hierarchy of materials or subject differ in African cultures compared to Western cultures? How do African cultures differ from Western cultures in their assessment of “fine art” as opposed to “craft”?

Purpose and function of african artwork : Use examples to explain why it is especially important to know the purpose and function of African artwork in order to understand it. How is pattern used to enhance cultural identity at Nankani compound, Sirigu, Ghana? What kinds of patterns are used..

Current conflicts within nations or between nations : Do you agree current conflicts within nations or between nations are due to competition, for resources, power, etc.? If so, support your answer with examples

Globalization has had positive or negative consequences : Do you think globalization has had positive or negative consequences? Give examples of both. Has globalization brought people or nations closer together (cooperation) or further apart (competition)? (Referring mostly to the Middle-East)

Calculate the expected rate of return on investments : 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?

Criticizing the actions of the theather organizers : Did members of the Bund and the partisians have a justifiable point in criticizing the actions of the theather organizers. Now in hindsight, do you consider the creation and maintenance of theather to be form of resistence why or why not?

Ivan turgenev and carl marx''s philosophies on humanity : What are Ivan Turgenev and Carl Marx's philosophies on humanity? How do they differ? What impact have both had on society today?

How has art influenced religion : How has art influenced religion? How does art add to spirituality in peoples lives? How does art relate to spirituality across cultures?

French baroque art different from baroque art elsewhere : How is French Baroque art different from Baroque art elsewhere? Compare Bernini’s David with that of Michelangelo and Donatello - discuss the purpose, moment in the narrative, and the viewer’s role?

User Account

All Pages