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- Compute the expected rate of return on investment i, given the following information: Rf=9%; CAPM=14%; beta i=1.0. Recalculate the required rate of return assuming beta i is 1.5Compute the expected rate of return on investment i given the followinginformation: Rf = 8%; E(RM) = 14%; βi = 1.0.b. Recalculate the required rate of return assuming βi is 1.8.What is the internal rate of return of an investment that requires a 10 percent minimum rate of return and has the following projected cash flows: Yr0 = -100, Yr1 = 25, Yr2 = 35, Yr3 = 45, Yr4 = 35, and Yr5 = 30? a. 19.33 percent b. 21.35 percent c. 20.05 percent d. 22.24 percent
- Consider the following information for the next year's return on IBM. probability return 10% 20% 0.8 0.2 Find the expected return. ⒸA. 2% B. 5% OC. 8% OD. 12% E. 11%The average rate of return for this investment is: a. 53% b. 18% c. 10% d. 21%11-2 What is the expected return of the following investment? Expected Return Probability Payoff 30.0% 0.3 0.2 10.0 -2.0 0.5
- Risk-free rate is 7% 2. Calculate the required rate of return for A. 1. 8.90% 2. 8.40% 3. 8.70% 4. 8.30%21. Write an equation for the toral expected return on tne investment the information using. Sir below. Std Dev. = 22 Min Ininas Investment=3000 subsequent investment= $ 50/mon. Rate of retum= 12%For investment A, the probability of the return being 20.0% is 0.5, 10.0% is 0.4, and -10.0% is 0.1 Compute the standard deviation for the investment with the given information. (Round your answer to one decimal place.) a. 85.00% b. 15.00% c. 34.00% d. 17.00% e. 9.00%
- Given the following probability distribution, compute for Outcome Probability Expected Return 20% 10% 2 60% 15% 3 20% 20% 1. the expected return a. 10% b. 12% С. 15% d. 20% 2. Standard deviation of returns а. 5.50% b. 6.18% C. 3.16% d. 10.00%Assume that an investment is forecasted to produce the following returns: a 20% probability of a 12% return; a 50% probability of a 16% return; and a 30% probability of a 19% return What is the standard deviation of return for this investment? A) 5.89% B) 16.1% C) 2.43% D) 15.7%The five alternatives shown below are being evaluated by the rate of return method. Incremental ROR when compared with alternative B C D 27.3 9.4 35.3 25 E 1.5 38.5 24.4 Alt B D E Initial Invest, $ ROR vs DN,% 9.6 15.1 -25,000 -35,000 -40,000 -60,000 -75,000 13.4 25.4 20.2 A --- --- (d) Alt D 46.5 27.3 6.8 ... If the projects are mutually exclusive and the Minimum Attractive Rate of Return is 9.2% per year, the best alternative is: (a) Alt A (b) Alt B (c) Alt C (e) Alt E