Investment Mark averaged a 20% return with a portfolio beta 1,5 and John averaged a 15% return with a portfolio beta 1,2. The t bill rate was 5% and the market return was 13% Which is better? a. Mark because he generated a larger alpha b. John because he generated a larger alpha c. Mark because he generated a high
5-1A. (Compound interest) To what amount will the following investments accumulate? a. $5,000 invested for 10 years at 10 percent compounded annually b. $8,000 invested for 7 years at 8 percent compounded annually c. $775 invested for 12 years at 12 percent compounded annually d. $21,000 invested for 5 years at 5 percent
Please help with the following question. In 2009 the expected dividends of the stocks in the broad market index are equal to $240 million when the discount rate was 8% and the expected growth rate of the dividends equalled 6%. Using the constant growth formula for valuation, if interest rates increase to 9% the value of the
A firm is considering two alternative projects. Project A needs an investment of $800,000. Project B needs an investment of $750,000. Relevant annual cash flow data for the two projects over their expected seven-year lives are as follows: Project A Project B
An excavator has a purchase price of $2,000,000, has a rating of 1,500 kW, an estimated life of 10 years an annual operating usage of 2,500 hours. A return on investment of 15% is required. For the following conditions determine the owning cost, total operating and total cost per operating hour for the excavator. a) Fuel cost
A truck is purchased for $1,500,000 and is planned to have an operating life of 10 years working 5,000 hours per year. What is the hourly owning cost of this machine , assuming the company requires a 16% return on investment ,using a) the average investment method b) the equivalent lease cost method
Please see the attached file. HMG is considering the manufacture of a new chemical compound that is used to make high-pressure plastic containers. An investment of $4 million in plant and equipment is required. The firm estimates the investment will have a five-year life, using straight-line depreciation toward a zero salvage
Measuring Stock Returns: Suppose you bought a stock at the beginning of the year for $ 76.50. During the year, the stock paid a dividend of $ 0.70 per share and had an ending share price of $ 99.25. what is the total percentage return from investing in that stock over the year?
The condominium - expected annual increase in market value = 2%. Municipal bonds - expected annual yield = 3%. High-yield corporate stocks - expected dividend yield = 5%. Savings account in a commercial bank-expected annual yield = 1%. High-growth common stocks - expected annual increase in market value = 6%; expected divide
Assume that you will receive $2000 a year in years 1 through 5, $3000 a year in years 6 through 8, and $4000 in year 9 with all cash flows to be received at the end of the year. If you require a 14 percent rate of return what is the present value of these cash flows? If you presently have $6,000 invested at a rate of 15%, ho
"I bought a one unit apartment (2 bedrooms, 2 baths, kitchen and living room) of the Executive Center for $300,000 with a loan from BOH for 6% per year, payable in equal monthly installments over a 20 year period. I hired also the Best Western Company to manage the unit for a fee of $500 a month. Before I rented the apartment t
Your firm has identified three potential investment priorities. The projects and their cash flows are shown here: Project Cash flow today ($) Cash flow in one year ($) A -10 20 B
Given the following characteristics of a portfolio of large-cap stocks, calculate the capitalization rate over a one-year period, t0 to t1: P0 $125,000 P1 $132,000 D0 $3,750 D1 $4,225 Calculate the total return. Please show calculations.
Please show work. 1. Use the information for the question(s) below. Vandhalia Corporation is expected pay a dividend of $1.40 per share at the end of this year and a $1.50 per share at the end of the second year. You expect Vandhalia's stock price to be $25.00 at the end of two years. Vandhalia's equity cost of capit
A firm evaluates all of its projects by applying the IRR rule. If the required return is 18 percent, should the firm accept the following project? Year Cash Flow 0 -$30,000 1 13,000 2 19,000 3 12,000
A firm is considering two capital investment projects. Project A involves an initial cost of $125,000. The discounted present value of all future cash flows is $145,000. Project B requires an initial expenditure of $85,000. The discounted present value of all future cash flows is $102,000. (i) Calculate the net present value
Your investment portfolio consists of $15,000 invested in one one stock - Microsoft. Suppose the risk-free rate is 5%. Microsoft stock has an expeted return of 12% and a volatility of 40%, and the market portfolio has an expected return of 10% and a volatility of 18%. Under the CAPM assumptions: a. What alternative invest
1. From the Bureau of Economic Analysis Web page (http://www.bea.gov), compare real GDP for 1960, 1970, 1980, 1990, and 2000. (a) Show the percentage change in real GDP over each those decades. (b) Do the percentages of GDP spent on consumption (C), investment (I), government (G), exports (X), imports ((M) differ signifi
Explain the underlying basis for foreign direct investment, and discuss several factors that may contribute to it. What factors have likely contributed to the current U.S. net direct investment position?
Hello, Can you help with the following question? Thank you in advance. Explain the underlying basis for foreign direct investment, and discuss several factors that may contribute to it. What factors have likely contributed to the current U.S. net direct investment position?
1) A company makes a $1,000 investment every year on December 31. Interest is 10% per year, but compounded semi-annually (every 6 months). They make 10 investments in all. a) Find the effective annual interest rate, Please see the attached file.
You own a bagel shop that generates an accounting profit of $45,000 per year. When you started the shop you had to cash in $60,000 in investments to buy equipment for the shop. The investments were earning 8 percent per year. You also gave up a job paying $38,000 per year. What is your economic profit? a. $-15,000
Carolina Clinic is considering investing in new heart monitoring equipment. It has two options: Option A would have an initial lower cost but would require a significant expenditure for rebuilding after 4 years. Option B would require no rebuilding expenditure, but its maintenance costs would be higher. Since the option B machin
Tony Siebers is an accounting major at a midwestern state university located approximately 60 miles from a major city. Many of the students attending the university are from the metropolitan area and visit their homes regularly on the weekends. Tony, an entrepreneur at heart, realizes that few good commuting alternatives are ava
Need some help answering the below question. Assume that an alternative has a 3-year life and that you calculated its annual worth over its 3-year lifecycle. If you were told to provide the annual worth of that alternative for a 4-year study period, would the annual worth value you calculated from the alternative's 3-year lif
Early in 2010, Inez Marcus, the chief financial officer for Suarez Manufacturing, was given the task of assessing the impact of a proposed risky investment on the firm's stock value. To perform the necessary analysis, Inez gathered the following information on the firms stock. During the immediate past 5 years (2005-2009), th
Pet Store - Part 1 A local pet store which has concentrated on selling puppies, is considering adding a line of pet food. A contractor estimates that is will cost $10,000 to convert some storage space into a retail area for the food. The store will purchase the specialty food for $15 and sell it for $30. Marketing research in
The reference organization is Wal-Mart. Please address the following questions: 1. To what extent is Wal-Mart's financial health affected by the Fed's policy on money and interest rates? What aspects of Fed actions affects Wal-Mart the most? 2. If inflation increases and the Fed acts to lower it, explain how the Open
The system of interstate roadways in the United States is a resource available to every citizen. But there is an ever increasing use of the roadways, and gridlock is becoming more severe everywhere. Should the U.S. government charge tolls for the use of certain roadways, or should investment be made to widen them with additional
Required investment- Truman industries is considering an expansion. The necessary equipment would be purchased for $9 million, and it would also require an additional $3 million investment in working capital. The tax rate is 40 percent. What is the initial investment outlay? The company plans to use a building it owns but is not