The average returns and standard deviation of Company Z and for the Market.

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Answer 1

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Chapter 6, Problem 11SP

a.

Summary Introduction

To determine: The average returns and standard deviation of Company Z and for the Market.

b.

Summary Introduction

To determine: The required return for Company Z.

c.

Summary Introduction

To discuss: The ways historical average return with return be appropriate given the systematic risk.

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Consider the following simplified financial statements for the Yoo Corporation (assuming no income taxes): Income Statement Balance Sheet Sales Costs $ 40,000 Assets 34,160 $26,000 Debt Equity $ 7,000 19,000 Net income $ 5,840 Total $26,000 Total $26,000 The company has predicted a sales increase of 20 percent. Assume Yoo pays out half of net income in the form of a cash dividend. Costs and assets vary with sales, but debt and equity do not. Prepare the pro forma statements. (Input all amounts as positive values. Do not round intermediate calculations and round your answers to the nearest whole dollar amount.) Pro forma income statement Sales Costs $ 48000 40992 Assets $ 31200 Pro forma balance sheet Debt 7000 Equity 19000 Net income $ 7008 Total $ 31200 Total 30304 What is the external financing needed? (Do not round intermediate calculations. Negative amount should be indicated by a minus sign.) External financing needed $ 896

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Answer 2

Question

Chapter 6, Problem 11SP

a.

Summary Introduction

To determine: The average returns and standard deviation of Company Z and for the Market.

b.

Summary Introduction

To determine: The required return for Company Z.

c.

Summary Introduction

To discuss: The ways historical average return with return be appropriate given the systematic risk.

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Answer 3

Question

Chapter 6, Problem 11SP

a.

Summary Introduction

To determine: The average returns and standard deviation of Company Z and for the Market.

b.

Summary Introduction

To determine: The required return for Company Z.

c.

Summary Introduction

To discuss: The ways historical average return with return be appropriate given the systematic risk.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 6, Problem 11SP

a.

Summary Introduction

To determine: The average returns and standard deviation of Company Z and for the Market.

b.

Summary Introduction

To determine: The required return for Company Z.

c.

Summary Introduction

To discuss: The ways historical average return with return be appropriate given the systematic risk.

Expert Solution & Answer

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Answer 5

Chapter 6, Problem 11SP

a.

Summary Introduction

To determine: The average returns and standard deviation of Company Z and for the Market.

b.

Summary Introduction

To determine: The required return for Company Z.

c.

Summary Introduction

To discuss: The ways historical average return with return be appropriate given the systematic risk.

Answer 6

Chapter 6, Problem 11SP

a.

Summary Introduction

To determine: The average returns and standard deviation of Company Z and for the Market.

Answer 7

Chapter 6, Problem 11SP

a.

Summary Introduction

To determine: The average returns and standard deviation of Company Z and for the Market.

Answer 8

b.

Summary Introduction

To determine: The required return for Company Z.

Answer 9

b.

Summary Introduction

To determine: The required return for Company Z.

Answer 10

c.

Summary Introduction

To discuss: The ways historical average return with return be appropriate given the systematic risk.

Answer 11

c.

Summary Introduction

To discuss: The ways historical average return with return be appropriate given the systematic risk.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 6 - a. What is meant by the investors required rate of...Ch. 6 - Prob. 2RQ Ch. 6 - What is a beta? How is it used to calculate r, the...Ch. 6 - Prob. 4RQ Ch. 6 - Prob. 5RQ Ch. 6 - Prob. 6RQ Ch. 6 - Prob. 7RQ Ch. 6 - What effect will diversifying your portfolio have...Ch. 6 - (Expected return and risk) Universal Corporation...Ch. 6 - (Average expected return and risk) Given the...

The average returns and standard deviation of Company Z and for the Market.

Solution Summary: The author determines the average returns and standard deviation of Company Z and for the Market. The required return is 25.56% and the historical average return with return be appropriate given the systematic risk.

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To determine: The average returns and standard deviation of Company Z and for the Market.

To determine: The required return for Company Z.

To discuss: The ways historical average return with return be appropriate given the systematic risk.

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