BUS 401 Week 2, DQ 1, Annuity and Capital Asset Pricing
BUS 401 Week 2, DQ 1, Annuity and Capital Asset Pricing fin571
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This 0 page Study Guide was uploaded by an elite notetaker on Wednesday November 11, 2015. The Study Guide belongs to fin571 at Kaplan University taught by in Fall 2015. Since its upload, it has received 27 views.
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Date Created: 11/11/15
Annuity and Capital Asset Pricing From Chapters 5 and 6 complete Study Problems 56 page 162 and 64 page 196 and post the answers to the discussion board Remember to complete all parts of the problems and report the results of your analysis Do not forget to show the necessary steps and explain how your attained that outcome Respond to at least two of your classmates pos ngs 56 Present value ofan annuity What is the present value of the following annuities a 2500 a year for 10 years discounted back to the present at 7 percent 1 1rquot PVannuity C X Iquot 2500x mm 07 2500 x 7024 17560 b 70 a year for 3 years discounted back to the present at 3 percent 1 1 3 70x 13903 003 70 x 2829 19803 c 280 a year for 7 years discounted back to the present at 6 percent 1 1 7 L06 280x 006 280 X 5582 156296 d 500 a year for 10 years discounted back to the present at 10 percent 1 1 10 500X 010 500 X 6145 30725 64 Required rate of return using CAPM a Compute a fair rate of return for Intel common stock which has a 12 beta The riskfree rate is 6 percent and the market portfolio New York Stock Exchange stocks has an expected return of 16 percent a Beta 6 1216 6 18 b Why is the rate you computed a fair rate The rate that we computed is fair as it rate compensates the investor for the time value of money and for risk And the investor has considered only non diversi able risk which is appropriate
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