Problem 10

You have until 9:00 PM to complete this assignment.

Intro

A stock has a beta of 1.5. The market risk premium is 7% and the risk-free rate is 3%.

Attempt 1/1

Part 1

What is the required return for the stock according to the CAPM?

Problem 12

You have until 9:00 PM to complete this assignment.

Intro

Vision Medical Labs wants to expand its service offering by buying a new machine. The machine will cost $250,000 and will generate additional annual expenses of $37,000 for labor and materials forever. Apart from these expenses, it will create annual profits of $79,000 forever.

The company has a cost of capital of 15% and the tax rate is zero.

Attempt 1/1

Part 1

What is the NPV of the machine project?