An investment banker has recommended a $100,000 portfolio containing assets B, D, and F. $20,000 will be invested in asset B, with a beta of 2; $50,000 will be invested in asset D, with a beta of 3; and $30,000 will be invested in asset F, with a beta of 1. The beta of the portfolio is ________.

Select one:

a. 2.3

b. 2.2

c. 3.4

d. 3.1

Find the book value of an asset that has an installed cost of $200,000, a recovery period of 5 years and an elapsed time since purchase of 3 years.

Select one:

a. $116,000

b. $58,000

c. $43,000

d. $87,000

Russell Industries is considering replacing a fully depreciated machine that has a remaining useful life of 10 years with a newer, more sophisticated machine. The new machine will cost $400,000 and will require $30,000 in installation costs. It will be depreciated under MACRS using a 5-year recovery period. A $25,000 increase in net working capital will be required to support the new machine. The firms managers plan to evaluate the potential replacement over a 4-year period. They estimate that the old machine could be sold at the end of 4 years to net $15,000 before taxes; the new machine at the end of 4 years will be worth $75,000 before taxes. Calculate the terminal cash flow at the end of year 4 that is relevant to the proposed purchase of the new machine. The firm is subject to a 40% tax rate.

Select one:

a. 93,640

b. 86,840

c. 83,440

d. 90,240