May I please have help with these 14 questions Question 1 A firm\'s stock is sel

Question

May I please have help with these 14 questions

Question 1
A firm's stock is selling for $78. The next annual dividend is expected to be $2.70. The growth rate is 9%. The flotation cost is $5.00. What is the cost of retained earnings?
Question options:

1) 13.09%

2) 12.46%

3) 12.7%

4) none of these

Using the constant growth model, a firm's expected (D1) dividend yield is 3% of the stock price, and its growth rate is 7%. If the tax rate is .35%, what is the firm's cost of equity?
Question options:

1) 10%

2) 6.65%

3) 8.95%

4) More information is required


Question 3
A correlation coefficient of _____ provides no risk reduction.
Question options:

1) 0

2) -1

3) +1

4) +.5

Question 4
The "efficient frontier" indicates
Question options:

1) alternatives with neutral combinations of risk and return.

2) alternatives with the highest returns.

3) alternatives with the best combination of risk and return.

4) alternatives with no risk.


Question 5
Which of the following combinations of investments would provide the firm with the highest negative correlation?
Question options:

1) textiles firm and retail firm

2) telecommunications firm and internet firm

3) soft drink manufacturer and healthcare firm

4) airline co. and gasoline manufacturer

Question 6
The coefficient of correlation
Question options:

1) takes on values anywhere from 0 to +1.

2) takes on values anywhere from 1 to 0.

3) takes on values anywhere from -1 to +1.

4) takes on values of 0 or larger.
Question 7
Place the following investment decisions in order from the lowest risk to the highest risk:
a--purchase of replacement machinery
b--new product in a foreign market
c--new product in the local market
d--repair of existing machinery

Question options:

1) b, c, a, d
2) d, a, b, c
3) d, b, a, c
4) d, a, c, b

Question 8
Which investment has the least amount of risk?
Question options:



1) Coefficient of variation = 11%, expected return = $800







2) Coefficient of variation = 11%, Standard deviation = $200
3) Standard deviation = $500, expected return = $5,000
4) Standard deviation = $100, expected return = $80


Question 9
A project's coefficient of variation is 0.40. The project has a positive coefficient of correlation of 0.20. The expected value is $2,000. What is one standard deviation?
Question options:
1) $400.00
2) $500.00
3) $800.00
4) $1,000.000


Question 11
Larry’s Athletic Lounge is planning an expansion program to increase the sophistication of its exercise equipment. Larry is considering some new equipment priced at $20,000 with an estimated life of five years. Larry is not sure how many members the new equipment will attract, but he estimates his increased yearly cash flows for each of the next five years will have the probability distribution given below. Larry’s cost of capital is 14 percent.
P
(probability) Cash Flow
.2..................... $2,400
.4..................... 4,800
.3..................... 6,000
.1..................... 7,200
What is the expected value of the cash flow? The value you compute will apply to each of the five years.

Question options:
a) Approximately $2,000
b) $4,920
c) $20,400
d) Can not be determined from the data given

Question 12
Larry’s Athletic Lounge is planning an expansion program to increase the sophistication of its exercise equipment. Larry is considering some new equipment priced at $20,000 with an estimated life of five years. Larry is not sure how many members the new equipment will attract, but he estimates his increased yearly cash flows for each of the next five years will have the probability distribution given below. Larry’s cost of capital is 14 percent.
P
(probability) Cash Flow
.2..................... $2,400
.4..................... 4,800
.3..................... 6,000
.1..................... 7,200
What is the expected net present value?
Question options:
a) Approximately $5,000
b) $16,890
c) $20,000
d) ($3,110)
Question 13
Monarck King Size Beds, Inc., is evaluating a new promotional campaign that could increase sales. Possible outcomes and probabilities of the outcomes are shown below. Compute the coefficient of variation.
Possible
Outcomes Additional Sales in Units Probabilities
Ineffective campaign...................... 20 .20
Normal response.......................... 30 .50
Extremely effective........................ 70 .30

Question options:
a) .50
b) .70
c) +1
d) -1

Question 14
Sompson Corp. is evaluating the introduction of a new product. The possible levels of unit sales and the probabilities of their occurrence are given.
Possible
Market Reaction Sales
in Units Probabilities
Low response........................................ 30 .10
Moderate response................................ 50 .20
High response ....................................... 75 .40
Very high response ............................... 90 .30
What is the expected value of unit sales for the new product?

Question options:
a) 50
b) 60
c) 70
d) 75
Question 15
Sompson Corp. is evaluating the introduction of a new product. The possible levels of unit sales and the probabilities of their occurrence are given.
Possible
Market Reaction Sales
in Units Probabilities
Low response........................................ 30 .10
Moderate response................................ 50 .20
High response ....................................... 75 .40
Very high response ............................... 90 .30
What is the standard deviation of unit sales?
Question options:
a) 18.74
b) 19.24
c) 19.51
d) 370

Explanation / Answer

A firm's stock is selling for $78. The next annual dividend is expected to be $2.70. The growth rate is 9%. The flotation cost is $5.00. What is the cost of retained earnings? a. 13.09% b. 12.46% c. 12.7% d. none of these Cost of Retained Earning= (2.7/78) + .09 = .1246 or 12.46% So the Answer is b. 12.46%

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