CHAPTER 2 PROBLEMS
1.What would the future value of $100 be after 5 years at 10% compound interest? a. $161.05 b. $134.54 c. $127.84 d. $151.29 e. $143.65 . FV of a lump sum
N I/YR PV PMT FV 5 10% -$100 $0 $161.05
Excel USE FV FUNCTION FORMULA IS =100*(1+
Unit 6:
1. Question:Magee Company's Your Answer: 10.25 %
stock has a beta of 1.20, the risk-free rate is 4.50%, and the market risk premium is 5.00%. What is Magee's required return?
10.50 % C ORR ECT
10.75 %
11.00 %
11.25 %
InstructorRMagee Explanation:
CAPM . Capital Asset Pricing Model . Remember we talked earlier about how interest rates have various components . parts . inflation, risk free, maturity risk, liquidity risk, default risk . Well the RETURN we expect on our investment is STOCKS also has p