Q6. (a) Given the holding-period returns shown here, compute the average returns and the standard deviations for the Beecham Corporation and for the market. (b) If Beecham's beta is 1.2 and the risk-free rate is 3 percent, what would be an appropriate required return for an investor owning Beecham? (Note: Because the returns of the market and Beecham Corporation are based on monthly data, you will need to annualize the returns to make them compatible with the risk-free rate. For simplicity, you can convert from monthly to yearly returns by multiplying the average monthly returns by 12 .) (c) How does Beecham's historical average return compare with the return you believe to be a fair return, given the firm's systematic risk? Q7. You are considering a project with an initial cash outlay of 200,000 and expected free cash flows of 55,000 at the end of each year for 6 years. The required rate of return for this project is 8 percent. a. What is the project's payback period? b. What is the project's discounted payback period? c. What is the project's NPV ? d. What is the project's PI ? e. What is the project's IRR ? f. What is the project's MIRR if the re-investment rate is 8 percent? g. What is the project's MIRR if the re-investment rate is 6 percent? Q8. Holiday Inn is considering either remodelling one of its regional hotels or tearing it down and building a new convention hotel, but because they both would occupy the same physical location, the company can only do one-that is, these are mutually exclusive projects. Both these projects have the same initial outlay of 2,000,000. The first project, since it is a remodel of an existing hotel, has an expected life of 5 years and will provide free cash flows of 540,000 at the end of each year for all 5 years. In addition, this project can be repeated at the end of 5 years at the same cost and with the same set of future cash flows. The proposed new convention hotel has an expected life of 10 years and will produce cash flows of 350,000 per year. The required rate of return on both of these projects is 8 percent. a. Calculate the NPV using replacement chains to compare these two projects. Which one is preferred project? b. Compute each project's equivalent annual annuity (EAA). Which project you would recommend to pursue