Compute return firm should earn given its level of risk

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Reference no: EM131613033

1. If the risk-free rate is 7.40 percent and the risk premium is 6.4 percent, what is the required return? (Round your answer to 1 decimal places.)

2. If the risk-free rate is 5.50 percent and the risk premium is 7.5 percent, what is the required return? (Round your answer to 1 decimal places.

3. If the risk-free rate is 5.50 percent and the risk premium is 7.5 percent, what is the required return? (Round your answer to 1 decimal places.

4. Nanometrics, Inc., has a beta of 3.11. If the market return is expected to be 12.75 percent and the risk-free rate is 5.50 percent, what is Nanometrics’ required return? (Round your answer to 2 decimal places.)

5. Suppose Paccar’s current stock price is $78.16 and it is likely to pay a $4.18 dividend next year. Since analysts estimate Paccar will have an 12.4 percent growth rate, what is its required return? (Round your answer to 2 decimal places.)

6. A manager believes his firm will earn a 17.00 percent return next year. His firm has a beta of 1.24, the expected return on the market is 15.00 percent, and the risk-free rate is 7.00 percent.

Compute the return the firm should earn given its level of risk. (Round your answer to 2 decimal places.)

Hastings Entertainment has a beta of 0.37. If the market return is expected to be 15.20 percent and the risk-free rate is 7.20 percent, what is Hastings’ required return? (Round your answer to 2 decimal places.)

Reference no: EM131613033

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