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Net Present Value, Equity Multiplier, Expected Return

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(1) What is the net present value of a project with the following cash flows if the required rate of return is 15 percent?
Year Cash Flow
0 -$42,398
1 13,407
2 21,219
3 17,800
(2) A firm has a debt-to-equity ratio of 0.5. What is the firm's equity multiplier?
(3) Microsoft's beta is 1. The risk free rate of return is 2%. If the expected return on the market is 12 percent, then the expected return on Microsoft is:

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Solution Summary

Your tutorial is attached in excel with some explanatory notes.

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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