1.You have invested 30 percent of your portfolio in Jacob,
1.You have invested 30 percent of your portfolio in Jacob, Inc., 40
percent in Bella Co., and 30 percent in Edward Resources. What is the expected return of your portfolio if Jacob, Bella, and Edward have expected returns of 0.04, 0.18, and 0.13, respectfully?
2.A project has the following cash flows:
0 1 2 3
($500) $120.00 $200 $290.00
What is the project’s NPV if the interest rate is $6%?
3.Christopher Electronics bought new machinery for $5,000,000 million. This is expected to result in additional cash flows of $1,215,000 million over the next 7 years. What is the payback period for this project? Their acceptance period is five years.
4.Use the following information to calculate your company’s expected return.
State Probability Return
Boom 20% 0.37
Normal 60% 0.12
Recession 20% -0.19