1. If your required rate of return was 8.25%pa, what wouldyou pay for stock A and stock B?

2. What if your required rate of return was 10.5%pa?

3. What if your required rate of return was 7.5%pa

4. If A and B were projects and the required rate of return was9.8%, which project would you undertake if your outlay forproject A was $190,000 and for project B was $170,000?

5. As above, except the required rate of return is 8.25%pa?

6. As above, except the required rate of return is 10.75%paand the outlay for project A is $125,000 and project B is$135,000

7. As above except the required rate of return is 7.75%pa andthe outlays for both project A and B is the same at $175,000

Year A B

0

1 $10,000.00 $10,000.00

2 $16,773.12 $14,717.52

3 $25,774.36 $23,963.75

4 $43,582.00 $37,016.33

5 $84,537.85 $61,881.24

6 $102,588.93 $108,164.77