Hi Winnie,

You previously helped me answer problem sets. Will you be able to assist with these problem sets on excel and show work. Please.

Problems

1. P8-1; P8-4; P8-7; P8-14; P8-20; P8-23; P8-24
2. P9-1; P9-2; P9-9; P9-14; P9-17

Rate of return Douglas Keel, a financial analyst for Orange Industries, wishes to estimate the rate of return for two similar-risk investments, X and Y. Douglas's research indicates that the immediate past returns will serve as reasonable estimates of ftuure returns. A year earlier, investment X had a market value of $20,000, and investment Y had a market value of $55,000. During the year, investment X generated cash flow of $1,500, and investment Y generated cash flow of $6,800. The current market values of investments X and Y are $21,000 and $55,000, respectively. A) Calculate the expected rate of return on investments X and Y using the most recent year's data. B) Assuming that the two investments are equally risky, which one should Douglas recommend? Why? tes that the value of $55,000. rated cash flow of $6,800. t year's data. commend? Why? Risk analysis Solar Designs is considering an investment in an expanded product line. Two possible types of expa After investigating the possible outcomes, the company made the estimates shown in the following table. Initial investment Annual Rate of Return Pessimistic Most Likely Optimistic Expansion AExpansion B $12,000 $12,000 16% 20% 24% 10% 20% 30% A) Determine the range of the rates of return for each of the two projects. B) Which project is less risky? Why? C) If you were making the investment decision, which one would you choose? Why? What does this decision imp D) Assume that expansion B's most likely outcome is 21% per year and that all other facts remain the same. Does . Two possible types of expansion are being considered. the following table. What does this decision imply about your feelings toward risk? facts remain the same. Does your answer to part c now change? Why? Coefficient of variation Metal Manufacturing has isolated four alternatives for meeting its need for increased prod The following table summarizes data gathered relative to each of these alternatives. Alternative Expected Return A 20% B 22% C 19% D 16% Standard Deviation of return 7% 9.50% 6% 5.50% A) Calculate the coefficient of variation for each alternative. B) If the firm wishes to minimize risk, which alternative do you recommend? Why? g its need for increased production capacity. Portfolio analysis You have been given the expected return data shown in the first table on three assetsF, G, and EXPECTED RETURN Year Asset F 2016 2017 2018 2019 Asset G 16% 17% 18% 19% Asset H 17% 16% 15% 14% 14% 15% 16% 17% Using these assets, you have isolated the three investment alternatives shown in the following table. Alternative Investment 1 100% of asset F 2 50% of asset F and 50% of asset G 3 50% of asset F and 50% of asset H A) Calculate the expected return over the 4-year period for each of the three alternatives. B) Calculate the standard deviation of returns over the 4-year period for each of the three alternatives. C) Use your findings in parts a and b to calculate the coefficient of variation for each of the three alternatives. D) On the basis of your findings, which of the three investment alternatives do you recommend? Why? le on three assetsF, G, and Hover the period 2016-2019. ollowing table. hree alternatives. of the three alternatives. commend? Why? Interpreting beta A firm wishes to assess the impact of changes in the market return on an asset that has a beta of 1 A) If the market return increased by 15%, what impact would this change be expected to have on the asset's return B) If the market return decreased by 8%, what impact would this change be expected to have on the asset's return? C) If the market return did not change, what impact, if any, would be expected on the asset's return? D) Would this asset be considered more or less risky than the market? Explain. n an asset that has a beta of 1.20. d to have on the asset's return? to have on the asset's return? asset's return? Portfolio betas Rose Berry is attempting to evaluate two possible portfolios, which consist of the same five assets She is particularly interested in using beta to compare the risks of the portfolios, so she has gathered data shown in the following table. Asset Totals Portfolio Weights Asset Beta Portfolio A Portfolio B 1 1.3 10% 30% 2 0.7 30% 10% 3 1.25 10% 20% 4 1.1 10% 20% 5 0.9 40% 20% 100% 100% A) Claculate the betas for portfolios A and B B) Compare the risks of these portfolios to the market as well as to each other. Which portfolio is more risky? nsist of the same five assets held in different proportions. portfolio is more risky? Capital asset pricing model (CAPM) For each of the cases shown in the following table, use the capital asset prici Case A B C D E Risk free rate, Rf 5% 8% 9% 10% 6% market return, rm 8% 13% 12% 15% 10% Beta 1.3 0.9 -0.2 1 0.6 ble, use the capital asset pricing model to find the required return. Concept of cost of capital Mace Manufacturing is in the process of analyzing its investment decision-making proc Two projects evaluated by the firm recently involved building new facilities in different regions, North and South. The basic variables surrounding each project analysis and the resulting decision actions are summarized in the foll Basic Variables Cost Life Expected return Least-cost financing Source Cost (after-tax) Decision Action Reason North $6 million 15 years 8% South $5 million 15 years 15% Debt Equity 7% Invest 8% > 7% cost 16% Don't invest 15%