FINC 3210 SP2023 Final Assignment Please submit the entire file with answersnot the answers only. 12. 8) Suppose you invest in 220 shares of Johnson and Johnson (JNJ) at $70 per share and 240 shares of Yahoo (YHOO) at $20 per share. If the price of Johnson and Johnson increases to $80 and the price of Yahoo decreases to $18 per share, what is the return on your portfolio? A) 12.77% B) 8.51% C) 9.37% D) 10.22% 12. 18) Suppose you invest $22,500 by purchasing 200 shares of Abbott Labs (ABT) at $55 per share, 200 shares of Lowes (LOW) at $35 per share, and 100 shares of Ball Corporation (BLL) at $45 per share. The weight of Abbott Labs in your portfolio is A) 48.89% B) 39.11% C) 29.33% D) 19.56% 12. 8) You expect General Motors (GM) to have a beta of 1 over the next year and the beta of Exxon Mobil (XOM) to be 1.2 over the next year. Also, you expect the volatility of General Motors to be 30% and that of Exxon Mobil to be 40% over the next year. Which stock has more systematic risk? Which stock has more total risk? A) GM, GM B) GM, XOM C) XOM, XOM D) XOM, GM 12. 4) Your estimate of the market risk premium is 9%. The risk-free rate of return is 3.8% and General Motors has a beta of 1.4. According to the Capital Asset Pricing Model (CAPM), what is its expected return? A) 14.8% B) 15.6% C) 16.4% D) 17.2% 13. 5) Outstanding debt of Home Depot trades with a yield to maturity of 5%. The tax rate of Home Depot is 40%. What is the effective cost of debt of Home Depot? A) 4.50% B) 4.65% C) 3.60% D) 3.00% 13. 10) IBM expects to pay a dividend of $2 next year and expects these dividends to grow at 9% a year. The price of IBM is $80 per share. What is IBM's cost of equity capital? A) 9.20% B) 10.35% C) 10.93% D) 11.50% 13. 13) Your estimate of the market risk premium is 7%. The risk-free rate of return is 4% and General Motors has a beta of 1.6. What is General Motors' cost of equity capital? A) 15.2% B) 14.4% C) 16.0% D) 13.7% 14. 14) Jeremy founded a company. He issues 100,000 shares of series A stock for his own $100,000 investment. He then goes through three further rounds of investment, as shown below: Round Price Number of Shares Series B $1.00 500,000 Series C $1.50 300,000 Series D $1.75 500,000 What is the post-money valuation for the series D funding round? A) $1.23 million B) $1.72 million C) $ 2.21 million D) $2.45 million 14. 27) You founded your own rm three years ago. You initially contributed $200,000 of your own money and in return you received 3 million shares of stock. Since then, you have sold an additional 3 million shares of stock to angel investors. You are now considering raising capital from a venture capital firm. This venture capital firm would invest $6 million and would receive 3million newly issued shares in return. After the venture capitalist's investment, what percentage of the firm will you own? A) 42% B) 33% C) 25% D) 20% 16. 16) A rm requires an investment of $30,000 and borrows $15,000 at 7%. If the return on equity is 19%, what is the rm's pretax WACC? A) 13% B) 6.5% C) 15.6% D) 18.2% 19. 9) Sales $122,800 Cost of Goods Sold 104,380 Accounts Receivable 10,900 Inventory 1 ,420 Accounts Payable 22,640 Cromwell Incorporated has the information shown above on its annual Income Statement and Balance Sheet (all numbers shown are in thousands). What is Cromwell's cash conversion cycle? A) -4] .8 days B) -36.1 days C) 24.3 days D) 111.6 days 21. 5) A call option gives the owner the right to an asset at a xed price at some iture date. A) sell B) buy C) hold D) none of the above 21. 3) Suppose that a stock sells at a price of $40 on the expiration date. Compute the price of a call option if the option strike price is $20. A) $20 B) $30 C) $40 D) $50 The end of the assignment. Good luck