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Using the following information, find the Expected Return, Variance, and Standard Deviation for the returns on Stock 1 and Stock 2. Also, find the Covariance and Correlation Coefficient between the
The project's WACC is 10.5%. What is the project's net present value (NPV)? What is the IRR? Should the project be accepted? Why or why not?
All of Division A's projects are equally risky, as are all of Division B's projects. However, the projects of Division A are less risky than those of Division B. Which of the following projects shou
A pension plan is obligated to make disbursements of $3.0 million, $3.8 million, and $3.0 million at the end of each of the next three years, respectively. Find the duration of the plan's obligation
However, Stock A's standard deviation of returns is 12% versus 8% for Stock B. Which stock should this investor add to his or her portfolio, or does the choice not matter?
Assume that the risk-free rate remains constant, but the market risk premium declines. Which of the following is most likely to occur?
The company uses the CAPM to calculate its cost of equity, and its target capital structure consists of common stock, preferred stock, and debt. Which of the following events would REDUCE its WACC?
Your father is about to retire, and he wants to buy an annuity that will provide him with $85,000 of income a year for 25 years, with the first payment coming immediately. The discount rate on such
On January 1, 2009, your brother's business obtained a 30-year amortized mortgage loan for $250,000 at a nominal annual rate of 7.0%, with 360 end-of-month payments. The firm can deduct the interest
The Ramirez Company's last dividend was $1.75. Its dividend growth rate is expected to be constant at 25% for 2 years, after which dividends are expected to grow at a rate of 6% forever. Its require
ABC Corp believes the following probability distribution exists for its stock. What is the coefficient of variation on the company's stock?
The CFO thinks the WACC should be based on market value weights, but the president thinks book weights are more appropriate. What is the difference between these two WACCs?
Barry Company is considering a project that has the following cash flow and WACC data. What is the project's NPV? What is IRR? What is MIRR? Should this project be accepted? Why?
The firm expects to operate the machine for 4 years and then to sell it for $12,500. If the marginal tax rate is 40%, what will the after-tax salvage value be when the machine is sold at the end of
The project would cost the firm $145,000. If the firm's cost of capital is 11%, find NPV, IRR and MIRR for the project. Do you accept this project? Why?
If you invest $10,000 in stock X and $25,000 in stock Y, what would be the expected return and risk on your portfolio?
Which is the best measure of risk for a single asset held in isolation, and which is the best measure for an asset held in a diversified portfolio?
You deposit $10,000 into a retirement account at the end of the next 10 years earning 9% interest, what is the future value of your retirement after 10 years?
What is the value of a perpetuity with an annual payment of $50 and a discount rate of 4%?
The exercise price on one of ORNE Corporation's call options is $35 and the price of the underlying stock is $34. The option will expire in 55 days. The option is currently selling for $0.25.
Marie's CFO has calculated the company's WACC as 7.83%. What is the company's cost of equity capital? Round your answer to two decimal places.
Sales $15,000 Number of orders 160 Percent of orders marked rush .70 Calls to technical support 80 Required: Calculate the profitability of the Chester Company account.
Daily marginal tax rate is 35%. You are forecasting incremental free cash flows for Daily enterprises. What are the incremental free cash flow associated with the new machine?
Outfitting the space for a coffee shop would require a capital expenditure of $35,000 plus an initial investment of $5,000 in inventory. What is the correct initial cash flow for your analysist of
Is there an arbitrage opportunity, if so, show the gain on the arbitrage.