iv. If the market expects a return of 21.2 percent

from stock X, what is its beta?

s. A project will require an investment in a new asset

of 10,000 dollars. It will be used on a project for

four years after which it will be disposed of on the

final day of year 4. Tax is payable at 30% on the

same year and capital allowances are available at

25% reducing the balance. The net operating cash

flows from the project are expected to be 4,000

dollars per annum. The company's cost of capital

is 30%. Ignore inflation

Calculate the written down allowance and hence

the tax savings for each year if the proceeds on

disposal of the asset are 2, 500 dollars

. Identify the free cash flows for the project and

calculate its net present value