Risk and probability Micro-Pub, Inc., is considering the purchase of one of two microhn cameras, R and S.
Both should provide benets over a 10-year period, and each requires an initial investment of $6,000.
Management has constructed the following table o

'jBFN 201 e Principlesof Finance '"Fi'nal' Exam MW
'Some imp0rtant'stugyipointsingladgzbutarenotlimited t0:
Concepts andcomputations: '
Operations:
Breakeven points
Depreciable value - -
Time value of money: l '
Single amount, annuity, and mixed cash fl

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Portfolio betas Personal Finance Problem Rose Berry is attempting to evaluate two possible portfolios, which a
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compare the risks of the po

Interpreting beta A rm wishes to assess the impact of changes in the market return on an asset that has a beta
of 0.5. Note: Enter a negative percentage number if the asset return decreases. '
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a. If the market return increased by 10%, what i

Cost of common stock equity Assume that today is January 1, 2013. Ross Textiles Wishes to measure its cost of
' ' c entl sellin for 28.50. The rm ex ects to a a $5.50 dividend at '
the end of the year 0013 i. Ihe growth rate of the diVidls is 12.00%. Ke'r

Principles of Finance BFN (201)
Name: Date:
Final Exam (Part 2a take home problems) ver.f12
Class day and time:
1) McDonaldson Diet Center and Wafe Emporium, Inc., is considering replacing an existing piece of
equipment with a more sophisticated machine.

"T WACC300k Weights and hiarketweights Webster Company has compiled the 111mm;ggbggggme' V m 7
'f1016wingtale. .
a. Calculate the weighted average cost of capital using book value weights.
b. Calculate the weighted average cost of capital using market

structure'is-composed-of=the-sour6es-and=targeFmarkethewerg - ts=s - emana- ~ ' e = omngta 5 :T ' .-
' The cost of debt is estimated to be 8.5%; the cost of preferred stock is estimated to be 15.5%; the cost of retained
earnings is estimated to be 18%; an