3. The data given below for Alabama city in 2019, answer the following question and show your calculation Export $300 Import $350 Personal consumption expenditures (C) $2,000 Government expenditure on goods and services (G) $1,100 Gross private investment (I) $1,300 Taxes $1000 Fractional Unemployment rate 2.3% Structural Unemployment rate 1.5% Cyclical unemployment rate -0.3% Reserve Ratio (RR) 20% Deposit at Banks $2000 Price level (P.L) 120 a. What is the value of Net Export? b. Is country borrowing from or lending to the rest of the world? c. What is the value of Gross Domestic Product GDP (Y)? d. What is the value of real GDP? e. What is the size of deposit expansion multiplier? f. What is the amount of required reserve the bank must hold? g. What is the amount of loans the bank can give? h. What is the total unemployment rate (UR)? i. What is the Natural Rate of Unemployment (NRU)? j. What is the value of private and households saving? k. What is the value of Government saving? l. What is the value of National Saving?

Ronaldo Company needs a capital of $200,000; it can either use no debt or use a debt for 60% with a 12% interest rate.
It has 9,000 shares outstanding that are expected to stay constant for any financing strategy taken and it has the following information:

Price/ Unit $5
Variable cost/Unit $2
Fixed costs $50,000
Tax rate 40%

The expected units sold based on probability of economic situation:
Economy Probability Units Sold
Good 0.2 140,000
Normal 0.5 80,000
Bad 0.3 10,000

10.87%

$9.9

$10.87

None of the above

10.87%

$13.07

$10.87

None of the above

163.63%

413.33%

0.565

10.4

1.033%

41.33%

0.565

10.4

$14.544

10.654%

7.245%

$20.22

$9.184

10.654%

$7.245

3.434%

1. Given the information below about a portfolio comprised of 3 stocks, answer the following: (show all the details of your calculations):

1. The expected return on each stock;

2. The expected return on the portfolio using the individual securities’ expected returns obtained in question (a) above.

3. Assume that the correlation between stock A and B is -0.25. Calculate the standard deviation of a portfolio containing 50% of stock A and 50% of stock B.

2. Next year a security will yield £98 with a probability of 0.65 and £112 with a probability of 0.35. An investor is willing to pay £90 for this asset today. The risk-free interest rate is 10%. Answer the following questions (show all the details of your calculations):

1. Is this investor risk seeking or risk averse? Explain.

2. What is the risk premium?

3. Assume that the investor is ready to pay £88 for this asset, is this investor risk seeking or risk averse? Explain.

4. Considering the result in question (iii) above, what is the risk premium?

FINANCIAL LEVERAGE EFFECTS The Neal Company wants to estimate next year's return on equity (ROE) under different financial leverage ratios. Neal's total capital is $11 million, it currently uses only common equity, it has no future plans to use preferred stock in its capital structure, and its federal-plus-state tax rate is 40%. The CFO has estimated next year's EBIT for three possible states of the world: $5.5 million with a 0.2 probability, $2.2 million with a 0.5 probability, and $0.6 million with a 0.3 probability. Calculate Neal's expected ROE, standard deviation, and coefficient of variation for each of the following debt-to-capital ratios. Do not round intermediate calculations. Round your answers to two decimal places at the end of the calculations. Debt/Capital ratio is 0. RÔE = % σ = % CV = Debt/Capital ratio is 10%, interest rate is 9%. RÔE = % σ = % CV = Debt/Capital ratio is 50%, interest rate is 11%. RÔE = % σ = % CV = Debt/Capital ratio is 60%, interest rate is 14%. RÔE = % σ = % CV = DO NOT ROUND INTERMEDIATE ANSWERS

The following data were taken from the financial statements of Gates Inc. for the current fiscal year. Property, plant, and equipment (net) $1,286,900 Liabilities: Current liabilities $152,000 Note payable, 6%, due in 15 years 757,000 Total liabilities $909,000 Stockholders' equity: Preferred $2 stock, $100 par (no change during year) $909,000 Common stock, $10 par (no change during year) 909,000 Retained earnings: Balance, beginning of year $970,000 Net income 381,000 $1,351,000 Preferred dividends $18,180 Common dividends 120,820 139,000 Balance, end of year 1,212,000 Total stockholders' equity $3,030,000 Sales $11,229,000 Interest expense $45,420 Assuming that long-term investments totaled $1,969,000 throughout the year and that total assets were $3,742,000 at the beginning of the current fiscal year, determine the following. When required, round to one decimal place. a. Ratio of fixed assets to long-term liabilities 1.7 b. Ratio of liabilities to stockholders' equity 0.3 c. Asset turnover 6

The Neal Company wants to estimate next year's return on equity (ROE) under different financial leverage ratios. Neal's total capital is $16 million, it currently uses only common equity, it has no future plans to use preferred stock in its capital structure, and its federal-plus-state tax rate is 40%. The CFO has estimated next year's EBIT for three possible states of the world: $5.7 million with a 0.2 probability, $2.1 million with a 0.5 probability, and $0.6 million with a 0.3 probability. Calculate Neal's expected ROE, standard deviation, and coefficient of variation for each of the following debt-to-capital ratios.
Do not round intermediate calculations.
Round your answers to two decimal places at the end of the calculations.
***Please dont Round intermediate Calculations ***
Thanks!!

Debt/Capital ratio is 0.

Debt/Capital ratio is 10%, interest rate is 9%.

Debt/Capital ratio is 50%, interest rate is 11%.

Debt/Capital ratio is 60%, interest rate is 14%.

Better Mousetraps has developed a new trap. It can go into production for an initial investment in equipment of $5.4 million. The equipment will be depreciated straight-line over 6 years, but, in fact, it can be sold after 6 years for $606,000. The firm believes that working capital at each date must be maintained at a level of 10% of next year’s forecast sales. The firm estimates production costs equal to $1.70 per trap and believes that the traps can be sold for $7 each. Sales forecasts are given in the following table. The project will come to an end in 6 years, when the trap becomes technologically obsolete. The firm’s tax bracket is 40%, and the required rate of return on the project is 12%.

Suppose the firm can cut its requirements for working capital in half by using better inventory control systems. By how much will this increase project NPV? (Do not round your intermediate calculations. Enter your answer in millions rounded to 4 decimal places.)

Please answer the questions in the space provided below each question. Show all of your work and circle your final answer.

1. You forecast there are three potential scenarios for the economy: a bull, flat, and bear market. You also estimate the returns for a stock and bond mutual fund as follows:

Using this information, you find for the stock fund: E(r_S)=0.032 and σ_S=0.1469, and for the bond fund: E(r_B)=0.016 and σ_B=0.0561.

1. Compute the covariance between the stock and bond fund. (Record your answer to at least four decimal places) (10 points)

2. Compute the correlation coefficient between the stock and bond fund. (Record your answer to at least four decimal places) (10 points)

You put 70% of your portfolio in the stock fund and the remaining 30% in the bond fund.

3. Compute the standard deviation of your portfolio. (Record your answer to at least four decimal places) (10 points)

[Q8-Q10] The following table shows four economic scenarios for next year with their respective probabilities. Also included in the table are the returns on stock A and returns on the market under the four scenarios.

QUESTION 8

1. Suppose that stock B has a beta of 3 and a volatility (i.e. return standard deviation) of 0.35. Between stock A and stock B, which stock has more systematic risk? Which stock has more total risk?

   	A.	Stock B; Stock B
   	B.	Stock B; Stock A
   	C.	Stock A; Stock B
   	D.	Stock A; Stock A

QUESTION 9

1. You hold $20,000 of stock A and $40,000 of stock B. What is the beta of your portfolio?

   	A.	1.5
   	B.	-1
   	C.	0
   	D.	2.5

QUESTION 10

1. What is the expected return on your portfolio? Assume that the CAPM holds and the risk-free rate is 0.03.

   	A.	0.12
   	B.	0.18
   	C.	0
   	D.	0.03

Please help and show work.

The following data were taken from the financial statements of Gates Inc. for the current fiscal year.

Assuming that long-term investments totaled $2,158,000 throughout the year and that total assets were $4,100,000 at the beginning of the current fiscal year, determine the following. When required, round to one decimal place.