{"id":13646,"date":"2020-11-24T09:06:32","date_gmt":"2020-11-24T09:06:32","guid":{"rendered":"http:\/\/onlineclassesguru.com\/index.php\/2020\/11\/24\/expected-rate-of-return-and-risk\/"},"modified":"2020-11-24T09:06:32","modified_gmt":"2020-11-24T09:06:32","slug":"expected-rate-of-return-and-risk","status":"publish","type":"post","link":"https:\/\/onlineclassesguru.com\/index.php\/2020\/11\/24\/expected-rate-of-return-and-risk\/","title":{"rendered":"expected rate of return and risk"},"content":{"rendered":"<style type=\"text\/css\"><\/style><p>1) (Expected rate of return and risk) Syntex, Inc. is considering an investment in one of two common stocks.<\/p>\n<p>1.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Given the information in the table, what is the expected rate of return for stock B?<\/p>\n<p>2.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0What is the standard deviation of stock B?<\/p>\n<p>3.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0What is the expected rate of return for stock A?<\/p>\n<p>4.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Based on the risk (as measured by the standard deviation) and return of each stock which investment is better? (Round to 2 decimal places)<\/p>\n<p>2) (NPV, PI, and IRR calculations) Fijisawa, Inc. is considering a major expansion of its product line and has estimated the following cash flows associated with such an expansion. The initial outlay would be $1,960,000, and the project would generate cash flows of $380,000 per year for six years. The appropriate discount rate is 4.0 percent.<\/p>\n<p>1.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Calculate the net present value.<\/p>\n<p>2.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Calculate the profitability index.<\/p>\n<p>3.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Calculate the internal rate of return.<\/p>\n<p>4.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Should this project be accepted? Why or why not?<\/p>\n<p>1.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a03) (Cost of debt) Sincere Stationery Corporation needs to raise $531,000 to improve its manufacturing plant. It has decided to issue a $1,000 par value bond with an annual coupon rate of 10.1 percent with interest paid semiannually and a 15-year maturity. Investors require a rate of return of 8.7 percent.<\/p>\n<p>1.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Compute the market value of the bonds.<\/p>\n<p>2.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0How many bonds will the firm have to issue to receive the needed funds?<\/p>\n<p>3.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0What is the firm\u2019s after-tax cost of debt if the firm\u2019s tax rate is 32 percent?<\/p>\n<p>4)(Cost of debt) Sincere Stationery Corporation needs to raise $451,000 to improve its manufacturing plant. It has decided to issue a $1,000 par value bond with an annual coupon rate of 11.1 percent with interest paid semiannually and a 15-year maturity. Investors require a rate of return of 9.6 percent.<\/p>\n<p>1.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Compute the market value of the bonds.<\/p>\n<p>2.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0How many bonds will the firm have to issue to receive the needed funds?<\/p>\n<p>3.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0What is the firm\u2019s after-tax cost of debt if the firm\u2019s tax rate is 34 percent?<\/p>\n<p>5) (Weighted average cost of capital) As a consultant to GBH Skiwear, you have been asked to compute the appropriate discount rate to use in the evaluation of the purchase of a new warehouse facility. You have determined the market value of the firm\u2019s current capital structure (which the firm considers to be its target mix of financing sources) as follows:<br \/>\nTo finance the purchase, GBH will sell 20-year bonds with a $1,000 par value paying 8.4 percent per year (paid semiannually) at the market price of $929. Preferred stock paying a $2.51 dividend can be sold for $34.03. Common stock for GBH is currently selling for $49.09 per share. The firm paid a $4.06 dividend last year and expects dividends to continue growing at a rate of 4.5 percent per year into the indefinite figure. The firm\u2019s marginal tax rate is 32 percent<\/p>\n<p>1.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Calculate component weights of capital:<\/p>\n<p>1.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0What is the weight of debt in the firm\u2019s capital structure?<\/p>\n<p>2.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0What is the weight of preferred stock in the firm\u2019s capital structure?<\/p>\n<p>3.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0What is the weight of common stock in the firm\u2019s capital structure?<\/p>\n<p>2.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Calculate component costs of capital:<\/p>\n<p>1.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0What is the after-tax cost of debt for the firm?<\/p>\n<p>2.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0What is the cost of preferred stock for the firm?<\/p>\n<p>3.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0What is the cost of common equity for the firm?<\/p>\n<p>3.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Calculate the firm\u2019s weighted average cost of capital.<\/p>\n<p>4.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0What is the discount rate you should use to evaluate the warehouse project? (Round to 3 decimal places.)<br \/>\n6 (Capital structure weights) In August of 2010 the capital structure of the Emerson Electric Corporation (EMIR) (measured in book and market values) appeared as follows:<img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/elitecustomwritings.com\/2020\/10\/12\/1-expected-rate-of-return-and-risk-syntex-inc-is-considering-an\/\" alt=\"Capital Struture Weights\" width=\"32\" height=\"32\" \/><\/p>\n<p>5.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0What weights should Emerson use when computing the firm\u2019s weighted average cost of capital?<\/p>\n<p>6.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0What is the appropriate weight of debt? (Round to 1 decimal place.)<\/p>\n<p>&nbsp;<\/p>\n<p>7.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0What is the appropriate weight of common equity? (Round to 1 decimal place.)<\/p>\n<p><center><a href=\"http:\/\/onlineclassesguru.com\/orders\/ordernow\"><img decoding=\"async\" src=\"https:\/\/encrypted-tbn0.gstatic.com\/images?q=tbn:ANd9GcTyj99p60XCLyLk1htB7-1neRt8-2QdnenNlQ&usqp=CAU\"target=\"_http:\/\/onlineclassesguru.com\/orders\/ordernow\"\/><\/center><p>","protected":false},"excerpt":{"rendered":"<p>1) (Expected rate of return and risk) Syntex, Inc. is considering an investment in one of two common stocks. 1.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Given the information in the table, what is the expected rate of return for stock B? 2.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0What is the standard deviation of stock B? 3.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0What is the expected rate of return for stock A? 4.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Based on&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-13646","post","type-post","status-publish","format-standard","hentry"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v17.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>expected rate of return and risk - onlineclassesguru<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"http:\/\/onlineclassesguru.com\/index.php\/2020\/11\/24\/expected-rate-of-return-and-risk\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"expected rate of return and risk - onlineclassesguru\" \/>\n<meta property=\"og:description\" content=\"1) (Expected rate of return and risk) Syntex, Inc. is considering an investment in one of two common stocks. 1.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Given the information in the table, what is the expected rate of return for stock B? 2.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0What is the standard deviation of stock B? 3.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0What is the expected rate of return for stock A? 4.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Based on...\" \/>\n<meta property=\"og:url\" content=\"http:\/\/onlineclassesguru.com\/index.php\/2020\/11\/24\/expected-rate-of-return-and-risk\/\" \/>\n<meta property=\"og:site_name\" content=\"onlineclassesguru\" \/>\n<meta property=\"article:published_time\" content=\"2020-11-24T09:06:32+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/elitecustomwritings.com\/2020\/10\/12\/1-expected-rate-of-return-and-risk-syntex-inc-is-considering-an\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"admin_admin\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebSite\",\"@id\":\"https:\/\/onlineclassesguru.com\/#website\",\"url\":\"https:\/\/onlineclassesguru.com\/\",\"name\":\"onlineclassesguru\",\"description\":\"Cheap Professional coursework and reaction papers help\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/onlineclassesguru.com\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"ImageObject\",\"@id\":\"http:\/\/onlineclassesguru.com\/index.php\/2020\/11\/24\/expected-rate-of-return-and-risk\/#primaryimage\",\"inLanguage\":\"en-US\",\"url\":\"https:\/\/elitecustomwritings.com\/2020\/10\/12\/1-expected-rate-of-return-and-risk-syntex-inc-is-considering-an\/\",\"contentUrl\":\"https:\/\/elitecustomwritings.com\/2020\/10\/12\/1-expected-rate-of-return-and-risk-syntex-inc-is-considering-an\/\"},{\"@type\":\"WebPage\",\"@id\":\"http:\/\/onlineclassesguru.com\/index.php\/2020\/11\/24\/expected-rate-of-return-and-risk\/#webpage\",\"url\":\"http:\/\/onlineclassesguru.com\/index.php\/2020\/11\/24\/expected-rate-of-return-and-risk\/\",\"name\":\"expected rate of return and risk - onlineclassesguru\",\"isPartOf\":{\"@id\":\"https:\/\/onlineclassesguru.com\/#website\"},\"primaryImageOfPage\":{\"@id\":\"http:\/\/onlineclassesguru.com\/index.php\/2020\/11\/24\/expected-rate-of-return-and-risk\/#primaryimage\"},\"datePublished\":\"2020-11-24T09:06:32+00:00\",\"dateModified\":\"2020-11-24T09:06:32+00:00\",\"author\":{\"@id\":\"https:\/\/onlineclassesguru.com\/#\/schema\/person\/1831fa4d28e47b468621cf27932f5742\"},\"breadcrumb\":{\"@id\":\"http:\/\/onlineclassesguru.com\/index.php\/2020\/11\/24\/expected-rate-of-return-and-risk\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"http:\/\/onlineclassesguru.com\/index.php\/2020\/11\/24\/expected-rate-of-return-and-risk\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"http:\/\/onlineclassesguru.com\/index.php\/2020\/11\/24\/expected-rate-of-return-and-risk\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/onlineclassesguru.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"expected rate of return and risk\"}]},{\"@type\":\"Person\",\"@id\":\"https:\/\/onlineclassesguru.com\/#\/schema\/person\/1831fa4d28e47b468621cf27932f5742\",\"name\":\"admin_admin\",\"image\":{\"@type\":\"ImageObject\",\"@id\":\"https:\/\/onlineclassesguru.com\/#personlogo\",\"inLanguage\":\"en-US\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/429c8d043f7a770af242b0031e8b9f2b?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/429c8d043f7a770af242b0031e8b9f2b?s=96&d=mm&r=g\",\"caption\":\"admin_admin\"},\"url\":\"https:\/\/onlineclassesguru.com\/index.php\/author\/admin_admin\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"expected rate of return and risk - onlineclassesguru","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"http:\/\/onlineclassesguru.com\/index.php\/2020\/11\/24\/expected-rate-of-return-and-risk\/","og_locale":"en_US","og_type":"article","og_title":"expected rate of return and risk - onlineclassesguru","og_description":"1) (Expected rate of return and risk) Syntex, Inc. is considering an investment in one of two common stocks. 1.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Given the information in the table, what is the expected rate of return for stock B? 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