Question
Assume you are 35 years old, andhave salary of $65,000 per year. You arein search of a good investment that can cover future goals which
Assume you are 35 years old, andhave salary of $65,000 per year. You arein search of a good investment that can cover future goals which include a car, emergency fund, and child education. You want invest 30% ofannual salary for the purpose of investment. For this, youmake an investment of 30% in equity, 70% in Debt. The return on Debt is 15%. The risk-free return is 4%, the beta of the market is 1.25, and the market return is 11%. What will be the E(R) of the stock using CAPM? If youwant an investment return of $100,000 at the age of 65 what will be the yearly investment you needs to make? Calculate the WACC.
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