Answer:
Beta= 1.26
Explanation:
<u>First, we will calculate the proportion of the portfolio of each security:</u>
Security A= 600/1,000= 0.6
Security B= 400/1,000= 0.4
<u>Now, the beta of the portfolio:</u>
Beta= (proportion of investment A*beta A) + (proportion of investment B*beta B)
Beta= (0.6*1.5) + (0.4*0.9)
Beta= 1.26
Answer:
Profit of $8,500
Explanation:
Strike Price = $90,000
Premium = $1,500
Break even point = Strike price - Premium
Break even point = $90,000 - $150
Break even point = $88500
Profit = Break even point - Share price
Profit = $88,500 - $80,000
Profit = $8,500
Answer:
I used an excel spreadsheet to answer this question.
Answer:
The EOQ is 642
The reorder point is 2,699
Explanation:
In order to calculate the EOQ we would have to calculate the following formila:
EOQ=√2DS/H
According to the given data we have the following:
D = 55,000
S = 21
H=40%*purchase cost
H=0.4*14 = 5.6
Therefore, EOQ=√(2*55,000*21)/5.6
EOQ=642
To calculate the reorder point If a service level of 98% is desired during the reorder interval, we would have to use the following formula:
reorder point=dL+z√σ∧2dL+σ∧2Ld∧2
reorder point=(7*205.22)+√(2.05*√(5∧2*7)+(3∧2*205.22∧2)
reorder point=2,699
Answer:
The after-tax cost of debt : 3.90%.
Explanation:
The semi-annual coupon = 1,000 x 5% /2 = $25.
The before-tax cost of debt, denoted as i, is the yield to maturity of the company's debt, which is calculated as below:
(25/i) x [1 - (1+i)^-40] + 1,000/(1+i)^40 = 854 <=> i = 3.147%.
=> Because the debt is semi-annual compounded, we have the: Effective annual rate = Before-tax cost of debt = ( 1+ 3.147%)^2 -1 = 6.39%.
=> After tax cost of debt = Before tax cost of debt x ( 1 - tax rate) = 6.39% x ( 1 - 0.39) = 3.90%.
So, the answer is 3.90%.
