What are the answer for all of the question in the file attachment?

1. Below is actual price and dividend data for three companies for each of 7 months. Month 1 2 3 4 5 6 7 Security A Security B Security C Price Dividend Price Dividend Price Dividend 27 33 16 29 36 18 29 0.25 36 0.35 14 0.4 25 32 15 26 38 16 29 0.25 38 0.35 17 0.4 30 39 17 A. B. C. D. E. Compute the rate of return for each company for each month. Compute the average rate of return for each company. Compute the standard deviation of the rate of return for each company Compute the correlation coefficient between all possible pairs of securities. Compute the average return and standard deviation for the following portfolio: 1/2 A + 1/2 B 1/2 A + 1/2 C 1/2 B + 1/2 C 1/3 A + 1/3 B + 1/3 C F. Plot the risk and return of all portfolios and indicate the efficient frontiers. 2. Navarro had sales of $830 million in 2012. Suppose you expect its sales to grow at an 10% rate in 2013, but that this growth rate will slow by 2% per year to a long-run growth rate for the industry of 2% by 2016. Based on Navarro's past profitability and investment needs, you expect EBIT to be 10% of sales, increases in net working capital requirements to be 8% of any increase in sales, and capital expenditures to equal depreciation expenses. If Navarro has $125 million in cash, $10 million in debt, 25 million shares outstanding, a tax rate of 35%, and a weighted average cost of capital of 12.0%. a. What is your estimate of the value of Navarro's stock in early 2013? b. What is the value of equity and price per share if the unlevered cost of equity is 14%? 3. Page Industrial Systems (PIS) is thinking about expanding its facilities. In considering the expansion, PIS's finance staff has obtained the following information: The expansion will require the company to purchase today $5 million of equipment. The equipment has 5 years life and will be depreciated using MACRS. The expansion will require the company to increase its inventories by $350,000 and its accounts payable will rise by $100,000. It is expected that the Net Working Capital (NWC) to increase by 10% throughout the life of the equipment. The equipment is expected to have a salvage value of $100,000 at the end of five years. The company's operating costs, excluding depreciation, are expected to be 60 percent of the company's annual sales. The expansion will increase the company's sales to $3 million in the first year and then the sales will increase by an increment of $0.5 million a year thereafter. The company's tax rate is 40%. The cost of capital is 10 percent. a. What is the Net Investment outlay? b. What are the cash flows over the life of equipment? c. What is the project's NPV? 4. Applied Technology Corporation (ATC) has the following capital structure: CAPITAL STRUCTURE Long-term Debt $10,000,000 Common equity (1 million shares) $20,000,000 $30,000,000 ATC's expected net income this year is $3,000,000. Its common stock price is $50 and investors requiring a rate of return of 15%. The long-term bond price is $1000 with the market interest rate of 10 percent today. The tax rate is 40 percent. ATC has the following investment opportunities: Annual Net Project Project Cost Cash Flow Life (years) A 1,000,000 $219,120 7 B 1,000,000 319,775 5 C 1,000,000 222,851 8 D 2,000,000 368,580 10 E 2,000,000 542,784 6 Part I a. Determine the cost of capital for the company based on book value and market value of the capital structure. b. Which projects should ATC accept based on the book value and market value of weighted average cost of capital? c. What is the optimal investment budget for both capital structures? Part II Refer to the problem above and given the information below and answer the following questions: Assume the project betas are as follows: Project A B C D E Beta 1.20 1.50 0.80 1.75 1.10 The risk-free rate is 5% and the market risk premium is 6% d. What are the costs of capital for each project? e. Show the NPV of each project? f. According to the risk characteristics of the projects; which project (projects) is appropriate to take? 5. The manager of Alpha Beta Funds is considering addition of the following stocks in his portfolio: Stocks A B C D E RM RF Standard Deviation 18% 15% 10% 20% 14% 10% 0 Covariance 0.012 0.0075 0.011 0.0175 0.016 1.0 0.9 Expected (Ri) 20% 12% 14% 16% 15% 14% 6% a. Calculate the required rate of return for each stock. b. Assume that the assistant to the manager, determine which stock(s) the manager of Alma Funds should include in his portfolio