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Homework answers / question archive / A project has the following cash flows

A project has the following cash flows

Finance

A project has the following cash flows. What is the payback period?

Year Cash Flow 0 -$310 1 156 2 102 3 91 4 71 

Keep two decimal points. Your result will be considered as correct if it is within +/- 0.1 from the precise answer.

 

 

 

The stock of Wiley United has a beta of 0.92. The expected market return is 10 percent and the risk-free rate is 2 percent. What is the expected return on this stock?

Keep two decimal points. Enter the answer in percentage value WITHOUT percent sign. For example if you get 11.47% enter 11.47 as the answer.

Your answer is considered as correct if it is within +/- 0.05 from the accurate answer.

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So, Payback period is 2.57 years.

 

Computation of Expected Return on Stock:

Expected Return on Stock = Risk-free Rate + Beta*Market Risk Premium

= 2% + 0.92 * (10%-2%)

= 2% + 0.92*8%

Expected Return on Stock = 9.36