If the first increment (B-A) AROR is 6.3%, and 2hd increment (C-B) AROR is 3.1%. The best alternative for a MARR of 4.0% using the incremental rate of return analysis is
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- Given the financial data for four mutually exclusive alternatives in the table below, determine the best alternative using the incremental rate of return (∆RoR) analysis. MARR =10%.If the risk-free rate is 4.8 percent and the risk premium is 6.8 percent, what is the required return? (Round your answer to 1 decimal place.) Required Return: ___.__%Compute the expected rate of return on investment i, given the following information: Rf=9%; CAPM=14%; beta i=1.0. Recalculate the required rate of return assuming beta i is 1.5
- Calculate the payback period.(using a 17% discount factor) and a fair approximation range of the Internal Rate of Return for the data presented belowConsider the following analysis of two alternatives, X & Y: YR X Y 0 -200 -1000 1 30 250 2 30 250 3 30 250 4 30 250 5 100 400 The MARR is 10%. Calculate the incremental rate of return in percent to the nearest 0.1 percent. Please explain each stepPlease calculate CAPM of Asset J with the following information: where, kj = required return on asset j, Rf = risk-free rate of return, (6%) bj = beta coefficient for asset j, (1.75) %3D Rm = market return. (10%) The equation for CAPM is kj = Rf + [bj x (Rm - Rf)] kj = Solve for required return on asset j (kj is CAPM) Please be detailed when answering and show all work, thank you.
- a. Compute the expected rate of return on investment i given the following information: the market risk premium is 5%; Rf = 6%; βi = 1.2. b. Compute E(RM).The expected market return is 5%. The risk-free rate is 3%. According to the CAPM equation, what is the expected return on an asset which has alpha=1.5%, and beta=1.9 ? O a. 11.0% O b. 5.3% O c. 5% O d. 6.8% O e. 8.3%Suppose an investment is equally likely to have a 24% return, or a - 8% return, or a 6% return. The expected return of this investment is%. [Please answer with two decimal places ]
- If the 1% percentile of an annual return distribution is - 2%, the risk free rate is 2% and the mean return is 4%, then A) The absolute 99% annual VaR is 2% B) The relative 99% annual VaR from the risk free rate is 4% C) The relative 99% annual VaR from the mean is 6% D) All of the aboveAlternatives X and Y have rates of return of 10% and 18%, respectively. What is known about the rate of return on the increment between X and Y if the investment required in Y is (a) larger than that required for X, and (b) smaller than that required for X? (c) Develop two spreadsheet examples that illustrate your responses to parts (a) and (b).1. If you perform a NPV analysis on a perspective investment using a "d" = 15% and: a. the NPV Is < 0, what can you tell me about the investment's IRR (time adjusted rate of return)? b. the NPV is > 0, what can you tell me about the investment's IRR (time adjusted rate of return)? c. the NPV is= 0, what can you tell me about the investment's IRR (time adjusted rate of return)? 2. We presume in Investment analysis that the payback method of evaluation is a better measure of.................than it is a measure of...................... We also think less of the payback method because it sometimes ignores the............., ..................of an investment since the................. the oftentimes occurs after the payback period has lapsed. 3. Please explain why we oftentimes equate EBITDA (earnings before subtracting] interest, taxes, depreciation & amortization) with NOI (net operating income) in examining business' profitability. Why don't…