Hello,

Can you please show me how i get the correct answer? Based on what I did, my answers are too far away from the actual.

Q6.You own a $60,000 portfolio which is invested in two stocks and a risk-free security. Your portfolio expected return is 9.35 percent and the beta is 1.23. Stock A has an expected return of 9 percent and a beta of 1.2 stock B has an expected return of 12 percent and a beta of 1.8. The risk-free rate of return is 4 percent. what is the value of our investment in stock A?

A. $21,000

CAMP>

Ri = Rf +Bi (Rm-Rf)

Rf = 4% +1.2(9%-4%) = 10%

10% from $60,000 => $6000

Q.what is the base case operating cash flow?

Unit sales : 1800

Price per unit: $20

Variable cost per unit: $11

Fixed costs $7000

Depreciation: $2500

Tax Rate: 35%

OCF = EBIT + Depreciation - tax

OCF = (1800 * $20) - (($11*1800) + $7000) + 0 + $12600

=$11700

A.$6855

Q. Which bank offer higher interest rate?

I am not sure how I can convert quarterly to monthly. Please show me how.

Bank : 7.5% compounded quarterly

Bank2: 7.25% compounded monthly

Q. You are making a $25,000 investment and feel that a 12 percent rate of return is reasonable given the nature of the risks involved. You feel that you will receive at least $100 in the first year, $36,000 in the second year, and potentially could see a cash outflow of $5000 in the third year. What is the net present value of this investment given your expectation?

A. $229.37

I am using a financial calculator but got a different answer somehow

Year/ CF

0 / -$25000

1 / 100

2/ 36000

3/ -5000

I/Y = 12%

Thanks