Module 4 WorksheetChapters 6 & 7

Please complete the problems in Excel on this worksheet and upload to the drop box for module 4 no later than Sunday, 11:55PM. Dont round use four decimal places until the final answer.

1. AA Corporations stock has a beta of 1.6. The risk-free rate is 2.5% and the expected return on the market is 14.5%. What is the required rate of return on AAs stock?

3. Suppose you manage a $6 million fund that consists of four stocks with the following investments:

StockInvestmentBeta

A$900,0001.70

B1,100,000-0.70

C1,500,0001.15

D2,500,0000.85

If the markets required rate of return is 12% and the risk-free rate is 3%, what is the funds required rate of return?

4. Boehm Incorporated is expected to pay a $1.50 per share dividend at the end of this year

(i.e. D1 = $1.50). The dividend is expected to grow at a constant rate of 11% a year. The required rate of return on the stock, r is 15%. What is the estimated value per share of Boehms stock?