Expected return

A stock's returns have the following distribution:

1. Calculate the stock's expected return. Round your answer to two decimal places.
   %

2. Calculate the stock's standard deviation. Do not round intermediate calculations. Round your answer to two decimal places.
   %

3. Calculate the stock's coefficient of variation. Round your answer to two decimal places.

Phu Lighters is doing its annual budget. It's expecting to start next year with the following mix of assets:

The asset mix is expected to stay at these levels for the whole year, with the exception of 3 months where current assets are expected to drop to $480,000. Its operating profit (EBIT) for the year is expected to be $620,000. Its tax rate is 40 percent. Shares are valued at $10 per share. It has a capital structure that is a combination of short-term bank financing and long-term financing (being 50% debt and 50% shareholder's equity). The short-term bank financing has an interest rate of 3 percent. The long-term debt financing has an interest rate of 6 percent. (Round the final answers to 2 decimal places.)

  a. Provide the following break-down of the asset mix:

  b. Assuming the firm is perfectly hedged, provide the following break-down of the financing mix:

  c. Calculate expected EPS if the firm is perfectly hedged. (Round your answer to two decimal places.)

EPS            $

d. Recalculate c if short-term rates go to 8 percent while long-term rates remain the same. (Round your answer to two decimal places.)

Sarah, Binah and Gila work 40 Hours a week. Binah and Gila can only do two activities with their 40 hours of work each week: scrub floors and/or wash window. Assume hours, floors and windows and infinitely divisible into fraction units. I a week of work Binah can wash 9 windows and scrub 0 floors, or scrub 3 floors and wash 0 windows or any linear combination of these two extremes. Gila can wash 12 windows and scrub 0 floors, or scrub 12 floors and wash 0 windows or any linear combination of these two extremes. Sarah is different. She can scrub 7 floors and was 0 windows, or scrub 4 floors and wash 12 windows, or any linear combination between these two points. However, once she get up to 12 windows, or any linear combination between these two points. However, once she gets up to 12 windows she gets tired and from that point on, each additional washed window costs her 1/2 scrubbed floor.

Question 1: Draw three different individual's production possibility frontier curve. Please make sure floors are on the vertical axis while windows are on the horizontal axis. (25 points)

McCormick & Company is considering a project that requires an initial investment of $24millionto build a new plant and purchase equipment. The investment will be depreciated as a modified acceleratedcost recovery system(MACRS) seven-year class asset. The new plant will be built on some of the company's land, which has a current, after-tax market value of $4.3million.The company will produce bulk units at a cost of $130 each and will sell them for $420 each. There are annual fixed costs of $500,000. Unit sales are expected to be $150,000each year for the next sixyears, at which time the project will be abandoned. At that time, the plant and equipment is expected to be worth $8million(before tax) and the land is expected to be worth $5.4million(after tax).  To supplement the production process, the company will need to purchase $1millionworth of inventory. That inventory will be depleted during the final year of the project. The company has $100millionof debt outstanding with a yieldtomaturity of 8percent, and has $150millionof equity outstanding with a beta of 0.9. The expected market return is 13percent,and the risk-free rate is 5percent.The company's marginal tax rate is 40percent.

6. Create an after-tax cash flow timeline.

7.What are the total expected cash flows at the end of year six?The $4.3millionis an opportunity cost and must be included at date zero as a cash outflow.If the project is accepted, however, the land can be sold in six years for $5.4million.

8.Find the NPV using the after-tax WACC as the discount rate.

9.Find the IRR.

10.Should the project be accepted? Discuss whether NPV or IRR creates the best decision rule.  

Matt limited has two production, departments, machine department and assembly department. There are two service departments, stores and maintenance. The budgeted overheads of each department along with overheads that have yet to be apportioned are listed below, along with details which can be used for appointment.

Total Machine Dept Assembly Dept Stores Maintenance

K’000 K’000 K’000 K’000 K’000

Indirect labour 1 125 000 400 000 650 000 40 000 35 000

Indirect material 310 000 160 000 120 000 10 000 20 000

Insurance and depreciation on buildings 100 000

Cleaning 25 000

Machinery Depreciation And insurance 1 500 000

Supervision of Production 70 000

Power 250 000

Heat and light 20 000

Total 3,400,000

Additional information Area occupied (m2) 6 000 3 000 800 200

% of power usage 25% 45% 20% 10%

Supervisor hours 15 20 - -

Value of machinery K’000 600 380 - 20

% use of stores department 40% 60% - -

% use of maintenance 40% 50% 10% -

Direct labour hours 200 000 500 000 - -

Machine hours 400 000 100 000 - -

Required: (i) Prepare an overhead analysis sheet

(ii) Compute overhead absorption rate for the two producing departments

Use the following data:

1. Contract the scatter plot of these data. Describe relationship between x and y. What type of relationship appears to exist between two variables? (you can copy and past from Excel,SAS,etc)

2. Compute the correlation coefficient r.

3. Test to determine whether the population correlation coefficient is positive. Use the α=0.01 level to conduct test. (calculate test statistics and make conclusion)

Let X equal the number of chocalate chips in a chocalate chip cookie. Sixty-two oberservations of X yielded the following frequencies for the possible outcomes of X:

(a) Use this data to graph the relative frequency histogram and the Poisson probability with

lamda = 5.6 on the same figure.

(b) Do these data seem to be observations of a Poisson random variable with

lamda = 5.6 ?

QUESTION Match up the payback period with the cash flows.

CF0: -1360 CF1: 560 CF2: 330 CF3: 820 CF4: 200

CF0: -530 CF1: 500 CF2: 100 CF3: 970 CF4: 130

CF0: -900 CF1: 680 CF2: 110 CF3: 950 CF4: 180

CF0: -1675 CF1: 580 CF2: 240 CF3: 700 CF4: 180

CF0: -1230 CF1: 590 CF2: 240 CF3: 550 CF4: 410

A. About 2.73 years B. About 2.12 years C. About 3.86 years D. About 2.57 years E. About 1.30 years

Broward Manufacturing recently reported the following information: Net income $490,000 ROA 7% Interest expense $176,400 Accounts payable and accruals $1,000,000 Broward's tax rate is 40%. Broward finances with only debt and common equity, so it has no preferred stock. 40% of its total invested capital is debt, while 60% of its total invested capital is common equity. Calculate its basic earning power (BEP), its return on equity (ROE), and its return on invested capital (ROIC). Round your answers to two decimal places.

Consider the configuration of particles shown below. These four particles form a square in the x-y plane with sides of 5.2 cm. Particle 1 is an electron, particles 2 and 3 are protons, while particle 4 is a neutron. The electron moves in the +y direction at 1.1x10⁵ m/s, while the other three particles are essentially motionless.

a) Find the electric field at particle 1’s location and the electric force acting on it.

b) Find the electric potential at particle 4’s location.

In addition, a very long wire carrying 23 mA of current in the +y direction sits 26 cm to the left of particles 1 and 2.

c) Find the magnetic field at particle 1’s location and the magnetic force acting on it.

Also, there is a conducting ring surrounding (but not in contact with) the current-carrying straight wire.

d) The direction of the current induced in this ring by the current in the straight wire is

1. clockwise
2. counterclockwise
3. neither; there is no induced current

Over a period of one second, the current in the straight wire is reduced to zero.

e) During that one second time interval, the direction of the current induced in the ring is

1. clockwise
2. counterclockwise
3. neither; there is no induced current

Then, the curent is switched back on over a period of one second, only now it runs downward (instead of up the wire as before).  

f) During that one second time interval, the direction of the current induced in the ring is

1. clockwise
2. counterclockwise
3. neither; there is no induced current