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1. Which of the following is/are true for a stock with beta equal to 1.5 (Select the best choice below.)
I) The stock has a? 50% higher expected return than the market portfolio.
II) Given a market risk premium of? 10%, the expected return on the stock would be? 15%.
III) The stock has? 50% more systematic risk than the average stock.
A. I only
B. II only
C. III only
D. I and III only
E. I, II and III
2. A firm purchases equipment for a capital budgeting project. The equipment cost $1,900,000 and its useful life is 8 years. The equipment is expected to be sold for $500,000 at the end of the project's 7 year life. The tax rate is 32%. What is the equipment's after tax salvage value?
$340,000
$253,143
$501,500
$416,000
Find the population mean and the standard deviation.
You own a portfolio equally invested in a risk-free asset and two stocks. What must the beta be for the other stock in your portfolio?
Novis Corporation has a cost of debt of 7%, a cost of equity of 11%, and a cost of preferred stock of 8%. The firm has 104,000 shares of common stock outstanding at a market price of $20 a share. What is the weighted average cost of capital for Novis..
What are the yearly pretax cash flows from this expansion project?
Joe's Carwash has $4 billion in debt and $2 billion in equity. The firm’s cost of debt of 3.3 percent and a cost of equity of 14.4 percent (assume that these costs do not change with the capital structure). The tax rate is 35%. What is the firm’s wei..
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If both bonds are to provide investors with the same yield, how many new bonds must Kimbo issue to raise $2,000,000?
Crimson inc. is planning to expand its operations in the fish-farming industry. The depreciation tax shield is as risky as the project’s assets.
David Ortiz Motors has a target capital structure of 30% debt and 70% equity. The yield to maturity on the company's outstanding bonds is 7.20%, and the company's tax rate is 35%. Ortiz's CFO has calculated the company's WACC as 10.95%. What is the c..
A global manufacturer of electrical switching equipment? (ESE) is considering outsourcing the manufacturing of an electrical breaker used in the manufacturing of switch boards. How many breakers would the electrical switching equipment company need p..
Calculate the dollar amount of dividends received and interest paid on the margin loan during the six-month period.
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