Foundations Of Finance
Foundations Of Finance
10th Edition
ISBN: 9780134897264
Author: KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher: Pearson,
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Chapter 6, Problem 20SP
Summary Introduction

To determine: The required return.

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(Capital Asset Pricing Model) CSB, Inc. has a beta of 0.758. If the expected market return is 10.5 percent and the risk-free rate is 6.5 percent, what is the appropriate expected return of CSB (using the CAPM)? The appropriate expected return of CSB is%. (Round to two decimal places.)
a) The initial outlay of the investment is €125,000. The income stream is €30,000 in year 1, €55,000 in year 2, €60,000 in year 3 and €70,000 in year 4. What is the net present value of the investment at 18% discount rate? b) What is the IRR of the aforementioned investment? c) Using the DCF approach requires some forecasting of the future – How can this. be done?
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