CBERGMAN chapter 5 HMWK

CBERGMAN chapter 5 HMWK - Chris Bergman Principles of...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Chris Bergman Principles of Finance SECTION 25049 OPC 004 October 13, 2008 christopherbergman@g.austincc.edu Chapter 5 1) a. Expected return of Investment X=12.5% Expected return of Investment Y= 12.36% b. Douglas should recommend X because it has a higher rate of return and equal risk. 10) a. F=4% G= 11% H=2% b. F= 13.38 % G= 22.78% H= 16.37% c. F= 3.35 G= 2.07 H= 8.19 Check H 10-a - i r r ( ) i r r - 2 P r i σ 2 r Asset F 0.40 - 0.04 = 0.36 0.1296 0.10 0.01296 0.10 - 0.04 = 0.06 0.0036 0.20 0.00072 0.00 - 0.04 = - 0.04 0.0016 0.40 0.00064 - 0.05 - 0.04 = - 0.09 0.0081 0.20 0.00162 - 0.10 - 0.04 = - 0.14 0.0196 0.10 0 .00196 0.01790 0 .1338 Asset G 0.35 - 0.11 = 0.24 0.0576 0.40 0.02304 0.10 - 0.11 = - 0.01 0.0001 0.30 0.00003 - 0.20 - 0.11 = - 0.31 0.0961 0.30 0 .02883 0.05190 0 .2278 Asset H 0.40 - 0.10 = 0 .30 0.0900 0.10 0.009 0.20 - 0.10 = 0 .10 0.0100 0.20 0.002 0.10 - 0.10 = 0.00 0.0000 - 0.40 0.000 0.00 - 0.10 = - 0.10 0.0100 0.20 0.002 - 0.20 - 0.10 = - 0.30 0.0900 0.10 0 .009 0.022 0 .1483 11) a. 2010 = 17.6% 2011 = 16.4% 2012 = 16%
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2013 = 15.2%
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 3

CBERGMAN chapter 5 HMWK - Chris Bergman Principles of...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online