Hat is the covariance between stocks

Assignment Help Financial Management

Reference no: EM131944598

The index model has been estimated for stocks A and B with the following results: R(A) = 0.01 + 1.4Rm R(B) = 0.03 + 1.1Rm Additionally, the standard deviation of the market index is 21%. What is the covariance between stocks A and B?

a. You now have $9101. At what annual interest rate would you have to invest this money so you can double it in 8 years? Assume annual compounding.

b. A firm is considering the purchase of a machine which would represent an investment of $29 million, and would be depreciated in a straightline basis over 5 years. Sales are expected to be $12 million per year, and operating costs 32% of sales. The company is currently paying $3 million in interest per year, has a tax rate of 40%, and a WACC of 10%. What is the company’s free cash flow for year 1 of this project?

Reference no: EM131944598

Questions Cloud

What is the project terminal cash flow : which would not change throughout the project. The firm's corporate tax rate is 40%. What is the project's Terminal Cash Flow?

What is estimated intrinsic value per share of common stock : Beishan Technologies' end-of-year free cash flow (FCF_1) is expected to be $70 million, and free cash flow is expected to grow at a constant rate of 5% a year.

Company plans to maintain constant dividend growth policy : Assume that the board of directors of the company plans to maintain a constant dividend growth policy of 4.00 per cent.

How much do you need to have in your bank account : If the account pays .67 percent interest per quarter, how much do you need to have in your bank account today to meet your expense needs over the next four year

Hat is the covariance between stocks : The index model has been estimated for stocks A and B with the following results: hat is the covariance between stocks A and B?

What is your portfolio expected return : You invest the rest of your capital in the risk-free rate, which offers a return of 3%. What is your portfolio's expected return?

The firm beta coefficient : The firm's beta coefficient is 1.34, and the yield on treasury bills is 7.4%. If you expect the market to earn a return of 12%,

Describe minimum four methods of collecting qualitative data : SDFD211 Statistical And Computational Mathematics Assignment. Describe a minimum of four methods of collecting qualitative data

Discuss net operating working capital requirements : Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives.

User Account

All Pages