[A] During 2007, a firm has sold five assets explained below.
Compute the tax liability on the assets. The firm pays a 40% tax rate on ordinary income.
|
Asset
|
Purchase
Price
|
Sale
Price
|
|
1
|
$10,000
|
$12,000
|
|
2
|
$50,000
|
$40,000
|
|
3
|
$37,500
|
$50,000
|
|
4
|
$ 3,000
|
$ 3,500
|
|
5
|
$15,000
|
$12,000
|
[B] Russo's Gas Distributor, Inc. wants to estimate the required return on a stock portfolio with a beta coefficient of 0.5. Suppose the risk-free rate of 6% & the market return of 12%, calculate the required rate of return.