Please solve, need help! 1. CAPM: Assume the risk-free rate is 5% and the S&P 500 index return is 10%. AA stocks systematic risk is represented by a beta of 1.2. A. What is your required rate of return? B. If after investing in the stock, you earned 15% rate of return, what is the alpha? 2. You have estimated the beta of BM stock at 1.60. If you purchase the stock today and sell one year later, the rate of return you have is 18% while S&P 500 goes up 10%. Do you overpay for the investment? Explain. 3. A. Suppose the firm has a target capital structure with a debt/equity ratio of 1/4, what is the portion of total funding from debt (D/V)? from equity (E/V)? B. From (A), you have calculated E/V and D/V. Assume the cost of debt is 8% and the cost of equity is 15%. The company is subject to a corporate tax rate of 25%. What is the weighted average cost of capital for the firm?

The following questions are from chapter 13 and chapter 14. Provide brief explanation to each answer. Do not attach any file. 1. CAPM: Assume the risk-free rate is 5% and the S\&P 500 index return is 10%. AA stock's systematic risk is represented by a beta of 1.2 . A. What is your required rate of return? B. If after investing in the stock, you earned 15% rate of return, what is the alpha? 2. You have estimated the beta of BM stock at 1.60. If you purchase the stock today and sell one year later, the rate of return you have is 18% while S\&P 500 goes up 10%. Do you overpay for the investment? Explain. 3. A. Suppose the firm has a target capital structure with a debt/equity ratio of 1/4, what is the portion of total funding from debt (D/V)? from equity (E/V)? B. From (A), you have calculated E/V and D/V. Assume the cost of debt is 8% and the cost of equity is 15%. The company is subject to a corporate tax rate of 25%. What is the weighted average cost of capital for the firm