Firm A has a beta of 1.3 and a debt-to-equity ratio of 0.4 and an interest rate of 9% on its debt. It has chosen Firm P as a proxy for a new line of business it is considering. Firm P has a beta of 1.6 and a debt to equity ratio of 0.8 and the expected return on the S&P 500 is 12% and the risk-free rate is 5.5%. The marginal tax rate is 40%.
A. Find the correct required return that the firm should use for
its investment in the new line of business.
B. What are the dangers associated with its using is own beta in
the calculation?
In: Finance
1.A bullet with a mass of 45 g is fired into a 8.3-kg block of wood resting on a floor against a spring. This ideal spring (k = 76 N/m) has a maximum compression of 28 cm. What was the initial speed of the bullet?
2.Two common and identical carts are used to perform an experiment. Cart A is pushed toward the stationary cart B with a velocity of 2.6 m/s. After the collision, cart A bounces back with a speed of 0.8 m/s and cart B moves of with a speed of 3.4 m/s. Why is this not possible?
In: Physics
Suppose there are two independent economic factors, M1 and M2. The risk-free rate is 5%, and all stocks have independent firm-specific components with a standard deviation of 56%. Portfolios A and B are both well diversified.
| Portfolio | Beta on M1 | Beta on M2 | Expected Return (%) |
| A | 1.7 | 2.2 | 35 |
| B | 2.1 | -0.8 | 8 |
What is the expected return–beta relationship in this economy? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Expected return–beta relationship E(rP) = 5% + ____ ?P1 + ____ ?P2
In: Finance
You are studying three linked genes in snapdragons. The flower color locus is in the center. There are 11.3 cM between the flower color locus and the plant height locus. There are 10.7 cM between the flower color locus and the leaf type locus. The coefficient of coincidence is 0.8. Pure-breeding tall, red-flowered plants with fuzzy leaves were crossed to pure-breeding dwarf, blue-flowered plants with smooth leaves. The F1 were testcrossed. Calculate the proportion of the testcross progeny that are expected to be dwarf with blue flowers. Round properly to 4 decimal digits.
In: Biology
Prior to eating breakfast, 25 participants were randomly assigned to eat a large meal, 25 to eat a small meal, and 25 to eat nothing. Immediately following the meal, all participants took a memory test. The means and estimated population variances for the three groups on the memory test were: Large: M = 2.1, S2 = 1.0; Small: M = 2.5, S2 = 1.2; Nothing: M = 2.9, S2 = 0.8. Using the .05 significance level, does amount of breakfast eaten affect memory? Perform a complete hypothesis test.
In: Statistics and Probability
Colt Manufacturing has two divisions: 1) pistols; and 2) rifles. Betas for the two divisions have been determined to the beta (pistol)= 0.8 and beta (rifle)= 1.2. The current risk-rate of return is 1.5%, and the expected market rate of return is 7.5%. The after-tax cost of debt for Colt is 5%. The pistol division's financial proportions are 32.5% debt and 67.5% equity, and the rifle division's are 42.5% debt and 57.5% equity.
a. What is the pistol's division's WACC?
b. What is the rifle division's WACC?
Round to two decimal places.
In: Finance
μ = the population mean speed (mph) of trucks in a specific region in Greeley, CO. A random sample of 8 trucks has a sample mean speed of 25.4 mph and the population standard deviation is known to be 3.2 mph. Find the 95% confidence interval for μ.
a.) (23.18, 27.62)
b.) (12.68, 18.70)
c.) (24.08, 30.05)
d.) (18.80, 24.56)
What is the required sample size if you want an error margin for the 95% confidence interval for μ to equal 0.8 mph?
a.) 62
b.) 60
c.) 58
d.) 64
In: Statistics and Probability
4.07. A taxi company manager is trying to decide whether the use of radial tires instead of regular belted tires improves fuel economy. Randomly selected 12 cars with radial tires yielded in a sample mean of 5.7 and sample standard deviation of 0.4, another randomly selected 15 cars with belted tires yielded a sample mean of 5.2 and a standard deviation of 0.8. Assume the populations to be approximately normal with equal variances.
State and conclude your hypothesis at the 0.05 level of significance based on manager’s claim?
Find P-Value.
In: Statistics and Probability
Find the effective annual rate of the following credit terms:
a.2.3% discount if paid within 88 days or net within 30 days
b.1.1% discount if paid within 35 days or net within 60 days
c.0.4% discount if paid within 14 days or net within 45 days
d.0.8% discount if paid within 23 days or net within 30 days
What is the effective annual rate of a 2.3% discount if paid within 88 days or net within 30 days?
In: Finance
23 hp, dc shunt motor is running at 1000 rpm when the armature voltage is 600 V. The armature resistance of the motor is 0.8 ohm, and the field resistance is 900 ohm. The efficiency of the motor at full load is 92 %.
a) Calculate the value of the resistance of the dynamic braking at full load. The armature current should be limited to 150% of the rated value.
b) If the motor operated in regenerative braking at a speed of 1100 rpm, calculate the line current.
c) Design a circuit for countercurrent braking (by reversing supply voltage) so that the line current will not exceed 120% of the rated value.
In: Electrical Engineering