Answer Happy

Year

A

B
0
1
$10,000.00

$10,000.00
2
$16,773.12

$14,717.52
3
$25,774.36

$23,963.75
4

$43,582.00
$37,016.33
5
$84,537.85

$61,881.24
6
$102,588.93
$108,164.77
a) If your required rate of return was 8.55%pa, what would you
pay for stock A and stock B?
b. What if your required rate of return was 10.65%pa?
c. What if your required rate of return was 7.85%pa
d. If A and B were projects and the required rate of return was
9.85%, which project would you undertake if your outlay for project
A was $190,000 and for project B was $170,000?
e. As above (d), except the required rate of return is 8.35%pa?
\
f. As above (d), except the required rate of return is 10.45%pa
and the outlay for project A is $125,000 and project B is
$135,000
g7. As above (d), except the required rate of return is 7.65%pa
and the outlays for both project A and B is the same at
$175,000