17.

Consider the following information, and then calculate the required rate of return for this portfolio. The total investment in the portfolio is $2 million. The market required rate of return is 10 percent, and the risk-free rate is 2 percent (so the market risk premium is 8%).

Stock Investment Beta

A $200,000 1.15

B $300,000 0.80

C $500,000 1.35

D $1,000,000 0.75

	a.	9.58%
	b.	9.86%
	c.	9.98%
	d.	10.12%

18.

A company purchases new production equipment that is supposed to last 20 years. Where and how will the cost of this purchase be recorded on the statement of cash flows?

	a.	as an outflow under operating activities
	b.	as an outflow under investment activities
	c.	as an outflow under financial activities
	d.	not recorded on the statement of cash flows