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makkiz [27]
3 years ago
8

Suppose Intel stock has a beta of 1.6, whereas Boeing stock has a beta of 1. If the risk-free interest rate is 4% and the expect

ed return of the market portfolio is 10%, according to the CAPM, a. What is the expected return of Intel stock? b. What is the expected return of Boeing stock? Stock Price/Share ($) Number of Shares Outstanding (millions) Golden Seas 13 1.00 Jacobs and Jacobs 22 1.25 MAG 43 30 PDJB 5 10 M12_BERK5561_04_SE_C12.indd 400 12/10/16 12:03 AM Chapter 12 Systematic Risk and the Equity Risk Premium 401 c. What is the beta of a portfolio that consists of 60% Intel stock and 40% Boeing stock? d. What is the expected return of a portfolio that consists of 60% Intel stock and 40% Boeing stock? (Show both ways to solve this.)

Business
1 answer:
AnnyKZ [126]3 years ago
8 0

Answer: see affixed, a document containing the solution

Explanation:

You might be interested in
Consider the three mutually exclusive alternatives below. Determine which alternative is preferable at an interest rate of 9% pe
laila [671]

Answer:

a. AW, A($) = 79646

b. AW, B ($) =  29,367

c. AW, C ($) = 80738

Explanation:

Solution:

First of let's sort out the data given for all three alternatives:

Alternative A:

Capital Investment = $400,000

Annual Expense = $189,000

Annual Revenue = $309,000

Salvage Value = $65,000

Life = 24 Years

Alternative B:

Capital Investment = $230,000

Annual Expense = $122,500

Annual Revenue = $222,500

Salvage Value = $180,000

Life = 5 Years

Alternative C:

Capital Investment = $150,000

Annual Expense = $134,000

Annual Revenue = $234,000

Salvage Value = $130,000

Life = 12 Years

a.

AW, A($) = - 400,000 x A/P(9%, 24) + (309,000 - 189,000) + 65,000 x P/F(9%, 24) x A/P(9%, 24)

AW, A($) = - 400,000 x 0.103 + 120,000 + 65,000 x 0.1264 x 0.103

AW, A($) = - 41,200 + 120,000 + 846.25

AW, A($) = 79646

b.

AW, B ($) = -230,000  x A/P(9%, 5) + (222,500 - 134,000)

AW, B ($) = -230,000  x 0.2571 + (222,500 - 134,000)

AW, B ($) =  29,367

c.  

AW, C ($) = - 150,000 x A/P(9%, 12) + (234,000 - 134,000) + 130,000 x P/F(9%, 12) x A/P(9%, 12)

AW, C ($) = - 150,000 x 0.1397 + 100,000 + 130,000 x 0.3555 x 0.1397

AW, C ($) = - 20,955 + 100,000 + 1,692.50

AW, C ($) = 80738

7 0
2 years ago
Gruden Company produces golf discs which it normally sells to retailers for $7 each. The cost of manufacturing 23,600 golf discs
pychu [463]

Answer:

Increase in income= $2,965.6

Explanation:

Giving the following information:

Gruden Company produces golf discs which it normally sells to retailers for $7 each. The cost of manufacturing 23,600 golf discs is:

Materials $ 12,036

Labor 35,400

Variable overhead 23,128

Fixed overhead 47,200

Total $117,764

McGee Corporation offers Gruden $4.91 per disc for 4,930 discs. If Gruden accepts the offer, its fixed overhead will increase from $47,200 to $53,700 due to the purchase of a new imprinting machine.

Total variable cost= (12,036 + 35,400 + 23,128)= 70,564

Unitary variable cost= 70,564/23,600= $2.99

Increase in fixed costs= $6,500

Increase in income= (4930*4.91) - (4930*2.99) - 6500= $2,965.6

8 0
2 years ago
The Carter Corporation makes products A and B in a joint process from a single input, R. During a typical production run, 50,000
klemol [59]

Answer: $54,000 per production run

Explanation:

As we are dealing with the decision of whether or not to process the good further, the irrelevant cost would be the cost of producing product B from input R.

This is because this cost has already been incurred to produce product B and so is a sunk cost. Sunk costs are irrelevant to the decision to process further.

30,000 units of B were made from 90,000 units R so the cost of B is:

= 30,000 / 50,000 * 90,000

= $54,000

<em />

<em>The options here are probably for a variant of this question.</em>

8 0
3 years ago
The amount of the average investment for a proposed investment of $191,000 in a fixed asset with a useful life of 4 years, strai
sineoko [7]

$30300
Annual depreciation = (purchase price - salvage value) / useful life
Straight line depreciation = Annual depreciation / (purchase price -salvage value)
The steps in calculating a straight line depreciation are:
Find out how much the asset costs.
To determine the entire depreciable amount, deduct the asset's estimated salvage value from the asset's purchase price.
Find out how long the item will be useful.
To calculate the annual depreciation amount, multiply the total from steps (2) and (3) by the figure determined in steps (3).
i.e, = $191000-$30300 = $160700
an asset with a useful life of 4 =$160700/4 =$40 175
so the straight-line depreciation rate is at 4.7%
In 4 years Straightline depreciation will be $30300
To learn more about Straight line depreciation please refer to-
brainly.com/question/11974283
#SPJ4

6 0
1 year ago
Canfield Technical School allocates administrative costs to its respective departments based on the number of students enrolled,
Svetradugi [14.3K]

Answer:

The total amount of administrative cost to the Accounting Department is $ 14,900.

Explanation:

In order to calculate the total amount of administrative cost to the Accounting Department, first we need to calculate the Utilization Ratio of the particulars, using the following formua:

Utilization Ratio=(Total amount particular/Utilised by accounting department)

Hence, the Utilization Ratio of Administration costs =(50/280)

                                                                                    =0.178

             the Utilization Ratio of Maintenance fee =(12,000/36,000)=0.33

             the Utilization Ratio of Utilities=(12,000/36,000)=0.33

Therefore, the total amount of administrative cost to the Accounting Department=(0.178×$50,000)+(0.33×$12,000)+(0.33×$6,000)

                  =$8,900+$4,000+$2,000

                  =$14,900

6 0
3 years ago
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