FINANCE QUESTIONS???

Posted on 2014-04-21 13:09:00 in Finance by ECON

Question 4:

In order to expand its business, Auto Parts Distributing, Inc., is considering the purchase of 10 pickup trucks at a total cost of $150,000. The company expects to keep these trucks for four years, then sell them. The company expects these trucks to generate net cash flow of $75,000 in year 1, $70,000 in year 2, $65,000 in year 3, $60,000 in year 4, and to sell after four years for a total price of $30,000 fully taxable. Its cost of capital is _12___%.



Calculate:



a. Present Value of cash flow for each year 1 thru 4

b. Payback period

c. Profitability Index

d. Net Present Value

e. Internal Rate of Return



Question 5:

Suppose Intel stock has a beta of 2.16, whereas Boeing stock has a beta of 0.69. If the risk-free interest rate is 4% and the expected return of the market portfolio is 10%, what is the expected return of a portfolio that consists of 60% Intel stock and 40% Boeing stock, according to the CAPM?

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