Net advantage or disadvantage of re-working the keyboards

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1. If the market risk premium is 12.9 percent and the risk-free rate is 3.1, what is the expected rate of return for a stock with a beta of 1.95 under the Capital Asset Pricing Model? Please show work and put answer to 4 decimal places.

2. The Manassas Company has 55 obsolete keyboards that are carried in inventory at a cost of $9,600. If these keyboards are upgraded at a cost of $7,200, they could be sold for $18,400. Alternatively, the keyboards could be sold “as is” for $7,800. What is the net advantage or disadvantage of re-working the keyboards?

Reference no: EM132034081

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