Your team is evaluating two mutually exclusive projects. The initial cost of each investment is $50,000. The probability of the cash flows is shown below.
If the project will have a 5 year life and the appropriate cost of capital is 9% calculate the following:
|
Probability
|
CF(A)
|
CF(B)
|
|
10%
|
(34,000)
|
(13,500)
|
|
25%
|
(8,500)
|
2,125
|
|
30%
|
17,000
|
19,000
|
|
25%
|
42,500
|
31,875
|
|
10%
|
68,000
|
46,750
|
Expected value
NPV
Standard deviation
IRR
MIRR
Use the information below for the next problem
|
Depreciation
|
34,000
|
|
EBIT
|
179,000
|
|
Investment in Operating Assets
|
69,000
|
|
Tax Rate
|
34%
|
|
Find the free cash flow
|
|
Calculate the free cash flow
Use the following information for the next problem
|
The Security Market Line
|
|
Security X
|
Market
|
|
Beta
|
0.76
|
1
|
|
Expected Return
|
?
|
12%
|
|
If the risk free rate is
|
2.80%
|
|
Find the expected return on security X