Expected Return and CAPM
Not what you're looking for?
9. Bill plans to open a do-it-yourself dog-bathing center in a storefront. The bathing equipment will cost $160,000. Bill expects the after-tax cash inflows to be $40,000 annually for 7 years, after which he plans to scrap the equipment and retire to the beaches of Jamaica. Assume the required rate of return is 10%. What is the project's NPV?
a. $14,210
b. $27,322
c. $32,556
d. $34,737
e. $45,001
10. What is the expected market return if the expected return on asset A is 16% and the risk-free rate is 7%? Asset A has a beta of 1.2.
a. 9.5%
b. 14.5%
c. 16.5%
d. 17.5%
e. 20.5%
Purchase this Solution
Solution Summary
The solution provides detailed answers and explanation for the two multiple choice questions being asked. The solution does not only give the correct letter response but also provides a detailed explanation for the correct answer. The solution is very easy to follow along for anyone with a basic understanding of CAPM and finance. Overall, an excellent response to the question being asked.
Solution Preview
9.
You can use a financial calculator or excel to solve such questions. I'll tell you the formula in Excel. In Excel ...
Purchase this Solution
Free BrainMass Quizzes
Income Streams
In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.
Learning Lean
This quiz will help you understand the basic concepts of Lean.
Managing the Older Worker
This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce
Accounting: Statement of Cash flows
This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.
Motivation
This tests some key elements of major motivation theories.