Problem 12.22 – CAPM and Expected Return
Fundamentals of Corporate Finance
Brealey, Myers, and Marcus
10th Edition
Given the expected rate of return on the market portfolio and the T-bill, find the beta of the stock.
Given the expected rate of return on the market portfolio and the T-bill, find the beta of the stock.
Determine the following: risk premium, required return, does it have positive NPV, what is its beta.
Given the internal rate of return, beta’s, risk-free rate, and expected rate of return… determine the required rate of return, if the project should be accepted, the required rate of return on the project, and should it be accepted.
Given the treasury bill rate, market risk premium, and the beta and internal rate of return… figure out the project costs of capital and which capital investments have positive NPVs.
Given perpetual income, T-bill rate, and expected market return… figure out the property value.
Given the corporate tax rate, and the market value and rate of return for debt, preferred stock, and common stock… figure out the WACC.
Determine Buildwell Conservation & Construction Inc’s cost of equity capital, WAAC, and should BCCI accept the project.
Given the information on WTC… figure out the WACC.
Given the equity beta, treasury bill rate, and market risk premium… find the asset beta and the WACC.
Determine Caterpillar’s book debt-to-value ratio, market debt-to-value ratio, and two measures to find the cost of capital.