finance ch 9

Use question 1 to answer the rest.

1. The historical returns for the past 5 years for Apache Motors common stock are: -5.0%, 3%, 10%, 6% and 16%.

The historical returns for the past 5 years for the market portfolio are: 1%, 4%, 7%, 8% and 10%.

The market value of Apache Motors Inc's common stock is $75 million.

The market value of Apache Motors Ic's debt is $ 25 million.

The Treasury bill rate (risk-free rate) is 2%.

The tax rate applicable to the company is 30%.

The cost of Debt for Apache is 8%.

The beta of Debt for Apache is 0.40.

Find the expected return on Apache Motors’ common Stock (historical average) 

Express your answer as %, to 2 decimals. Do not include % or $ or comma sign in your answer.

2. Find the expected return on Market Portfolio (historical average) 

3. Find the variance of the Apache Motors common stock returns.

4. Find the variance of the Market portfolio returns.

5. Find the Standard Deviation of the Apache Motors common stock returns

6 Find the Standard Deviation of the market portfolio returns.

7. Find the CoVariance between returns of Apache Motors common stock and Market Portfolio.

8. Find the Correlation between returns of Apache Motors common stock and market portfolio.

9. Find the Market Risk Premium.

10. Find the beta of the Apache Motors common stock returns.

11. Find the Cost of Equity ie., required rate of return on Apache Motors common stock using CAPM.

12. Find the Weighted Average Cost of Capital (WACC) for  Apache Motors.

13. Find the Asset beta of Apache Motors.