What is the anticipated return on security

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Reference no: EM132019504

1. Using the formula for the security market line, if the risk-free rate is 7%, the market rate of return is 12%, the standard deviation is 8% and the beta is 1.8, what is the anticipated return on the security?

2. A company has constant growth of 4%, an expected dividend of $3.00, and a market capitalization rate of 12%. By the dividend valuation model (DVM), what is the value of this stock?

3. We’re looking at a 2-year project. It needs $30,000 investment in new equipment, annual depreciation for the 2 years is $15,000/year. Expect to sell the equipment for $10,000 at the end of year 2. Tax rate is 40%. Required return is 15%. What’s the proceeds from sale of the asset in year 2?

A. $6,000

B. $4,000

C. $10,000

D. $15,000

E. Need more information

Reference no: EM132019504

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