Answer:
a. What is the average annual return?
average annual return (mean) = (-4.5% + 28.1% + 12.2% + 3.7%) / 4 = 9.875%
b. What is the variance of the stock's returns?
variance = [(-4.5% - 9.875%)² + (28.1% - 9.875%)² + (12.2% - 9.875%)²) + (3.7% - 9.875%)²] / 4 = (206.64 + 332.15 + 5.41 + 38.13) / 4 = 582.33 / 4 = 145.5825
c. What is the standard deviation of the stock's returns?
standard deviation = √145.5825 = 12.06%
Answer:
$587,500
Explanation:
You are required to calculate the value of the levered firm;
vL = vU + Dt, whereby;
vL = Value of levered firm
vU = value of unlevered firm
Dt = debt * tax ; which is the tax shield
Find value of unlevered firm;
vU = [EBIT(1-tax) ]/ rE
= [100,000(1-0.30)] / 0.16
= 437,500
Value of levered firm;
vL = 437,500 + (500,000*0.30)
= 437,500 +150,000
= $587,500
B. Participative management and empowerment
The answer is Wireless networks