Blog

A project has an estimated sales price of $71 per unit, variable costs of $44.03 per unit, fixed costs of $57,000, a required return of 14 percent, an initial investment of $79,500, no salvage value, and a life of four years. Ignore taxes. What is the degree of operating leverage at the financial break-even level of output?

Assume the market rate of return is 10.1 percent and the risk-free rate of return is 3.2 percent. Lexant stock has 2 percent less systematic risk than the market and has an actual return of 10.2 percent. This stock:

A stock has annual returns of 5 percent, 21 percent, −12 percent, 7 percent, and 6 percent for the past five years. The arithmetic average of these returns is _____ percent while the geometric average return for the period is _____ percent.

Which one of the following statements is correct if you purchase an item with credit terms of 2/15, net 30?

Corrinne purchased a stock for $63.80 per share, received a dividend of $2.68 per share, and sold the shares for $59.74 each. During the time he owned the stock, inflation averaged 2.8 percent. What was the approximate real rate of return on this investment?

A stock had returns of 2 percent, −23 percent, and 13 percent over the past three years. What is the geometric average return for this time period?

Which of the following are assumptions of the capital asset pricing model (CAPM)? I. A risk-free asset has no systematic risk. II. Beta is a reliable estimate of total risk. III. The reward-to-risk ratio is constant. IV. The market rate of return can be approximated.

FisherCo is intending to invest in a new project. The ________ is the minimum rate of return the firm will accept on this project.

Over the past four years a stock had prices of $12.78, $13.34, $16.30, and $15.40, respectively. The stock pays an annual dividend of $.50 per share. What is the geometric average return on this stock?

Dee’s Toys has a target debt-equity ratio of .62. Its WACC is 11.3 percent and the tax rate is 21 percent. What is the cost of equity if the aftertax cost of debt is 6.3 percent?