Liberty Services is now at the end of the final year of a project. The equipment originally cost $26,500, of which 75% has been depreciated. The firm can sell the used equipment today for $8,000, and its tax rate is 40%. What is the equipments after-tax salvage value for use in a capital budgeting analysis? Note that if the equipments final market value is less than its book value, the firm will receive a tax credit as a result of the sale.

$7,450

$6,750

$6,000

$6,250

An investor currently holds the following portfolio:

Security Amount Invested Beta

Stock A $16,000 Beta = 1.3

Stock B $48,000 Beta = 1.8

Stock C $96,000 Beta = 2.2

If the risk-free rate of return is 2% and the market-risk premium is 7%, then the required return on the portfolio is

23.93%

15.93%

11.95%

21.91%