Purchase Solution

# Stock returns, WACC, Operating and Cash cycle

Not what you're looking for?

5. Consider the following information:
Rate of return if state occurs
State of Probability of
Economy State of Economy Stock R Stock S Stock T
Boom .25 .30 .40 .25
Good .40 .10 .15 .10
Poor .25 .00 -.05 -.10
Bust .10 -.25 -.15 -.20
Your portfolio is invested 40% in stock R, 35% in Stock S, and 25% in Stock T. What is the expected return of the portfolio? What is the standard deviation of the return?

6. Given the following information for Acme Corporation, find the weighted average cost of capital. Assume the company's tax rate is 3 5%.
Debt: 10,000 9 percent coupon bonds outstanding, \$ 1,000 par value, 12
years to maturity, selling for 103 percent of par; the bonds make
annual payments.
Common stock; 100,000 shares outstanding, selling for \$65 per share; beta is .95. Preferred stock: 15,000 shares of 7.5% preferred stock outstanding, currently selling
for \$80 per share.
Market: 7 percent market risk premium and 5 percent risk-free rate.

7. Consider the following financial statement information for the Acme Corporation:
Item Beginning Ending
Inventory \$120,000,000 \$105,000,000
Accounts receivable 80,000,000 84,000,000
Accounts payable 75,000,000 79,000,000
Net sales \$800,000,000
Cost of goods sold 550,000,000
Calculate the operating and cash cycles.

##### Solution Summary

Calculations for expected return, standard deviation of the return, weighted average cost of capital, and operating and cash cycles have been carried out.

##### Free BrainMass Quizzes

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

##### Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.

##### Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

##### SWOT

This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.

##### Change and Resistance within Organizations

This quiz intended to help students understand change and resistance in organizations