Can you please show me how i get the correct answer? Based on what I did, my answers are too far away from the actual.
Q6. You own a $60,000 portfolio which is invested in two stocks and a risk-free security. Your portfolio expected return is 9.35 percent and the beta is 1.23. Stock A has an expected return of 9 percent and a beta of 1.2 stock B has an expected return of 12 percent and a beta of 1.8. The risk-free rate of return is 4 percent. what is the value of our investment in stock A?
Ri = Rf +Bi (Rm-Rf)
Rf = 4% +1.2(9%-4%) = 10%
10% from $60,000 => $6000
Q. what is the base case operating cash flow?
Unit sales : 1800
Price per unit: $20
Variable cost per unit: $11
Fixed costs $7000
Tax Rate: 35%
OCF = EBIT + Depreciation – tax
OCF = (1800 * $20) – (($11*1800) + $7000) + 0 + $12600
Q. Which bank offer higher interest rate?
I am not sure how I can convert quarterly to monthly. Please show me how.
Bank : 7.5% compounded quarterly
Bank2: 7.25% compounded monthly
Q. You are making a $25,000 investment and feel that a 12 percent rate of return is reasonable given the nature of the risks involved. You feel that you will receive at least $100 in the first year, $36,000 in the second year, and potentially could see a cash outflow of $5000 in the third year. What is the net present value of this investment given your expectation?
I am using a financial calculator but got a different answer somehow
Year / CF
0 / -$25000
1 / 100
I/Y = 12%
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