1. (Expected Rate of Return and Risk) B. J. Orange Enterprises is evaluating a security. One-year
Treasury bills are currently paying 1.9 percent (with little risk 1 percent). Calculate the
investments expected return and its standard deviation. Should Or
A3. (Net advantage to leasing) A firm is considering leasing a computer system that costs
$1,000,000 new. The lease requires annual payments of $135,000 in arrears for 10 years.
The lessee pays income taxes at a 35% marginal rate. If it p