Portfolio A has an expected return of 10% per year and a standard deviation of 20% per year, while the risk-free asset returns 2% per year.

a. What is the expected return of a portfolio consisting the risk-free asset and portfolio A that has a standard deviation of 15%?

b. What is the portfolio weight on A of a portfolio consisting the risk-free asset and portfolio A that has a standard deviation of 15%?

c. What is the standard deviation of a portfolio consisting the risk-free asset and portfolio A that has an expected return of 6%?

1. VALUATION. For this and the next 2 questions: A company's FCFs are shown below. After Year 3, FCF is expected to grow at a constant rate of 5%. Cost of capital is 13%. Calculate the horizon value of the firm (i.e. HV3).

   	Year 1	Year 2	Year 3
   FCF	-$20	$30	$40

   		$525 million
   		$500 million
   		$323.08 million
   		$397.37 million
   		None of the above

QUESTION 22

1. Calculate the value of the firm today (i.e. the PV of both the FCFs and the horizon value).

   		$525 million
   		$500 million
   		$323.08 million
   		$397.37 million
   		None of the above

QUESTION 23

1. Suppose the firm's market value of debt is $50 million. What is your estimate of the firm's value of equity?

   		$330.54 million
   		$347.37 million
   		$447.36 million
   		$397.37 million

Maynard Company projects the following sales for the first three months of the year: $15800 in January; $15,900 in February; $11,100 in March. The company expects 60% of the sales to be cash and the remainder on account. Sales on account are collected 50% in the month of the sale and 50% in the following month. The Accounts Receivable account has a zero balance on January 1. Round to the nearest dollar.

Requirements:

2.) Prepare a revised schedule of cash receipts if receipts from sales on account are 70% in the month of the sale, 10% in the month following the sale, and 20% in the second month following the sale. What is the balance in Accounts Receivable on March 31?

Requirement 2. Prepare a revised schedule of cash receipts if receipts from sales on account are 70% in the month of the? sale, 10?% in the month following the?sale, and 20?% in the second month following the sale. What is the balance in Accounts Receivable on March 31?? ?(Leave unused and zero balance account cells?blank, do not enter? "0".)

.Squaw Valley Recreation is in the process of analyzing a new three year project to grow their business. At the beginning of this project, Squaw Valley will need to spend $2,460,000 to build the required fixed asset. This asset will have a depreciation period of three-years and will use the straight-line method of depreciation and it will be depreciated to zero. The asset will have no salvage value at the end of the project. This new project will have an estimated annual sales amount of $2,950,000. The estimated annual costs for this project are $1,970,000. The appropriate tax rate to use for this analysis is 22 percent. The CFO of Squaw Valley has indicated that the required return for this project is 9 percent. Calculate the NPV for this project. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

what is an appropriate asset allocation for the investment portfolio of a 30 year old? what is dollar cost averaging and what should the investor do to take advantage of it? As the investor gets old, should he/she make adjustments to the allocation? If so, please discuss how the allocation in each asset class should change and why.

2. Assume the one-year interest rate is 8% on GBP and 1% on EUR. At the same time, inflation is running at an annual rate of 3% in Germany and 1.5% in UK. The current spot rate is EUR/GBP 1.17.

a) If the one-year forward premium of the euro against the pound is 8%, is there an arbitrage opportunity? Explain.

b) If there is an arbitrage opportunity, will the British or the German investor be able to make a profit? How much will an investor's profit be if he can invest GBP100,000 or EUR180,000 for 1 year? Assume that he owns this money and does not borrow. Please show your work.

Last year, 46% of business owners gave a holiday gift to their employees. A survey of business owners indicated that 40% plan to provide a holiday gift to their employees. Suppose the survey results are based on a sample of 60 business owners.

Prepare a schedule showing the amortization of a $12,000 loan to be repaid in 10 end-of-year installments that include interest at a rate of 6%. Jared and Courtney Jill own a parcel of fertile farm land which a local farmer has offered to rent for a period of 10 years. He is willing to make a payment of $20,000 today or pay an ordinary annuity of $3,400 at the end of each of the next 10 years. Which payment method should Jared and Courtney accept if the appropriate rate of return is 9%? A group of five faculty members at a Midwest University have recently purchased several acres near the school. They plan to gravel it and rent the parking spaces to commuting students. The cost of the project is $100,000. They paid $25,000 cash and are financing the balance with a note at 7.0% annual interest to be paid off in five equal annual payments with the first payment to be made at the end of the first year. The rental receipts are to be placed in an account for future improvements and cannot be used to repay the loan. If the annual payments are shared equally, how much would each member need to contribute annually to pay off the loan?

The economy has been growing at an average rate of​ 2.5% during the last year. The chairman of the Federal Reserve has stated that due to the economic growth and improvement in the labor​ markets, as evidenced by a declining unemployment​ rate, that the Fed stands ready to increase interest rates. ​ Meanwhile, the government is having to deal with a growing budget deficit and may need to borrow money from the public to fund its operations. This is easily done with the sale of Treasury bills and bonds. ​ However, such an increase in borrowing could affect the results of the​ Fed's actions. ​ Also, any tax reductions that occur will likely affect expenditures by both consumers and businesses. This in turn is expected to increase GDP assuming no surprise events that would negatively affect employment and economic growth.

1. The reaction of the Fed Chairman is that the economic growth during this phase of the economic cycle could produce higher ______

and the​ Fed's number one goal is for stable ______.

2. The phase of the business cycle given the facts in the statement above implies the economy is not in a ______ phase.  

3. The​ government's increased demand for funds attained from the bond markets implies that as the supply of

bonds ________ holding demand​ constant, the price will ________ and pushing interest rates _______.

4. If interest rates increase due to the Fed​ actions, the economic impact is a result of _______ policy.

5. If the Fed does nothing but the government decides to increase bond​ sales, the resulting impact on interest rates would be a result of _______ policy.

6. Economic variables that predict the near term future condition of the economy are grouped together and called ______ indicators.

7. Unemployment rates exceeding ______ ​(spell out the​ value) percent would indicate the economy could be heading towards

a _______.

8. If the economic environment described above​ continues, business managers could see their cost of labor _______ in the near term if the unemployment rate goes ________, and financing costs further ______ because of anticipated Fed actions. All these events could produce​ (inflation/deflation) _______ which could in turn cause the business cycle to reach its ​ (peak/trough) ______.