Which one of the following best describes an advantage of the average accounting return (AAR) method of analysis? The use of a cutoff rate as a benchmark Easy availability of information needed for the computation The use of pre-tax income in the computation Use of real (Instead of nominal) average Income of a project Inclusion of time value of money considerations Question 12 4 pts Business Ald is considering two independent projects. The profitability index decision rule indicates that both projects should be accepted. This result most likely does which one of the following? Fails to provide useful information as the form must reject at least one of the projects Assumes the firm has sufficient funds to undertake both projects Agrees with the decision that would also apply if the projects were mutually exclusive Bases the accept reject decision on the same variables as the average accounting return Conflicts with the results of the net present value decision rule Question 13 What is the amount of the risk premium on a one-month U.S. Treasury bill if the risk-free rate is 2.8 percent and the market rate of return is 8.35 percent? 5.55% 8.35% 2.80% 0% 11.15% Question 14 4 pt The stock of Rammstein Ltd. has a beta of 1.42 and an expected long-run growth rate of 3 percent. The one-month U.S. Treasury bill has a return of 2.3 percent. The 10-year AAA-rated corporate bonds have a return of 4 percent. The stock market risk premium is 4.59 percent. What is the expected rate of return on the stock? 14.42% 10.46% 8.19% 8.82% 9.46% Question 15 4 pts You have $23,800 to invest in a stock portfolio. Your choices are Stock X with an expected return of 100 percent and Stock Y with an expected returne 6.3 percent. Your goal is to create a portfolio with an expected return of 10.2 percent. All money must be invested. How much will you invest in Stock (Keep 6 decimal places in intermediate calculation.) $22,345 $14,600 $20,627 $15,273 $18,937 Previous