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Gnoma [55]
3 years ago
8

Suppose two factors are identified for the U.S. economy: the growth rate of industrial production, IP, and the inflation rate, I

R. IP is expected to be 6% and IR 7%. A stock with a beta of 1 on IP and 0.7 on IT currently is expected to provide a rate of return of 15%. If industrial production actually grows by 7%, while the inflation rate turns out to be 9%, what is your best guess for the rate of return on the stock?
Business
1 answer:
lawyer [7]3 years ago
7 0

Answer:

The new rate of return is 15.4%

Explanation:

The revised estimate on the rate of return on

the stock would be:

• Before

• 14% = α +[4%*1] + [6%*.4]

α = 7.6%

• With the changes:

• 7.6% + [5%*1] + [7%*.4]

The new rate of return is 15.4%

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"In the past few years, McDonald’s has made a lot of changes to its menu, adding more healthy choices and more higher-priced ite
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Explanation: MCdonalds change in menus and adding more healthy choices does brings change in the traditional value chain of the company.

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3 years ago
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6 0
3 years ago
ou wish to retire in 20 years, at which time you want to have accumulated enough money to receive an annual annuity of $32,000 f
AleksAgata [21]

Answer:

Annual contributions to the retirement fund will be $6,347.31

Explanation:

First find the Present Value of the Annuity giving payments of $32,000 annually for 25 years at the rate of 10%.

Using a Financial Calculator enter the following data

PMT = $32,000

P/y = 1

N = 25

R =  10%

FV = 0

Thus, the Present Value, PV is $290,465.28

At the time of retirement (in 20 years time) the Value of the annuity fund is $290,465.28.

Next we need to find the Payments PMT to reach this amount in 20 years time at the interest rate of 8%

Using a Financial Calculator enter the following data

FV = $290,465.28

N = 20

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PV = $0

Thus, the Payments, PMT required will be $6,347.3080

Conclusion :

Annual contributions to the retirement fund will be $6,347.31

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mart [117]

Answer:

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