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Food Express is a well-established grocery chain. Computer Power is an up-and-coming computer software developer for business. Bridge Steel is an integrated steel producer, focusing on steel for buildings and bridges. Some information about the companies was provided by an investment banking company as follows: Firm Food Express Computer Power Bridge Steel Beta 0.71 0.94 1.07 Portfolio's beta Expected Cash Flow Year 1 $7.7 million 2 million 9.9 million Expected Cash Flow Growth Rate Years 2 to 5 year 6 and on 2% 88 2% a. If the risk-free rate is 3% and the expected market risk premium is 7%, what is each firm worth? (Enter your answers in millions. For example, an answer of $13,000,000 should be entered as 13. Round your answers to 2 decimal places. Do not round intermediate calculations.) Value of Food Express (FE) today Value of Computer Power (CP) today Value of Bridge Steel (BS) today $ E b. If you owned all three companies, what would be the beta of your stock portfolio based on market- value weights? (Round your answer to 2 decimal places.) $ million $ 2% 6% 3% million million

Food Express is a well-established grocery chain. Computer Power is an up-and-coming computer software developer for business. Bridge Steel is an integrated steel producer, focusing on steel for buildings and bridges. Some information about the companies was provided by an investment banking company as follows: Firm Food Express Computer Power Bridge Steel Beta 0.71 0.94 1.07 Portfolio's beta Expected Cash Flow Year 1 $7.7 million 2 million 9.9 million Expected Cash Flow Growth Rate Years 2 to 5 year 6 and on 2% 88 2% a. If the risk-free rate is 3% and the expected market risk premium is 7%, what is each firm worth? (Enter your answers in millions. For example, an answer of $13,000,000 should be entered as 13. Round your answers to 2 decimal places. Do not round intermediate calculations.) Value of Food Express (FE) today Value of Computer Power (CP) today Value of Bridge Steel (BS) today $ E b. If you owned all three companies, what would be the beta of your stock portfolio based on market- value weights? (Round your answer to 2 decimal places.) $ million $ 2% 6% 3% million million

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Food Express is a well-established grocery chain. Computer Power is an up-and-coming computer software developer for business. Bridge Steel is an integrated steel producer, focusing on steel for buildings and bridges. Some information about the companies was provided by an investment banking company as follows: Firm Food Express Computer Power Bridge Steel Beta 0.71 0.94 1.07 Portfolio's beta Expected Cash Flow Year 1 $7.7 million 2 million. 9.9 million Expected Cash Flow Growth Rate Years 2 to 5 year 6 and on 2% 8% 28 a. If the risk-free rate is 3% and the expected market risk premium is 7%, what is each firm worth? (Enter your answers in millions. For example, an answer of $13,000,000 should be entered as 13. Round your answers to 2 decimal places. Do not round intermediate calculations.) Value of Food Express (FE) today Value of Computer Power (CP) today Value of Bridge Steel (BS) today $ $ $ million million 2% 6% 38 million b. If you owned all three companies, what would be the beta of your stock portfolio based on market- value weights? (Round your answer to 2 decimal places.)
Transcribed Image Text:Food Express is a well-established grocery chain. Computer Power is an up-and-coming computer software developer for business. Bridge Steel is an integrated steel producer, focusing on steel for buildings and bridges. Some information about the companies was provided by an investment banking company as follows: Firm Food Express Computer Power Bridge Steel Beta 0.71 0.94 1.07 Portfolio's beta Expected Cash Flow Year 1 $7.7 million 2 million. 9.9 million Expected Cash Flow Growth Rate Years 2 to 5 year 6 and on 2% 8% 28 a. If the risk-free rate is 3% and the expected market risk premium is 7%, what is each firm worth? (Enter your answers in millions. For example, an answer of $13,000,000 should be entered as 13. Round your answers to 2 decimal places. Do not round intermediate calculations.) Value of Food Express (FE) today Value of Computer Power (CP) today Value of Bridge Steel (BS) today $ $ $ million million 2% 6% 38 million b. If you owned all three companies, what would be the beta of your stock portfolio based on market- value weights? (Round your answer to 2 decimal places.)
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