Problem 13.04 – Portfolio Expected Return
Fundamentals of Corporate Finance
Ross, Westerfield, and Jordan
13th Edition
Given the information on the stocks, how much will you invest in Stock X & Y?
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Given the information on the stocks, how much will you invest in Stock X & Y?
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Find the expected return with the given state of the economy, probability of the state of the economy, and portfolio return if state occurs.
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Given the information on WTC… figure out the WACC.
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Calculate each firm’s ROIC and ROE given various debt-to-capital ratios and compare them.
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Determine the share price and all-equity firm value for Trapper Corporation. Then consider plan II and determine the value of the levered firm.
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Determine if the firm should operate the truck until the end of its 5-year physical life, and if not, determine the truck’s optimal economic life.
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Find the expected return given three states of the economy and the corresponding return if that state occurs.
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Given two plans, one with more debt than the other, and the all equity capital structure, determine the EPS under each, the break-even levels of EBIT. Repeat the problem given a tax rate.
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Determine the optimal capital budget and which projects the firm should undertake while assuming independent projects. For the second part, assume that two of the projects are considered mutually exclusive, and determine the set of projects that would correspond with the firm’s optimal capital budget. Finally, redo the problem assuming the firm uses project risk differentials.
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Given the equity beta, treasury bill rate, and market risk premium… find the asset beta and the WACC.
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