Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

Douglas Keel, a financial analyst for Orange Industries, wishes to estimate the rate of return for two similar-risk investments, X and Y. Douglas's research indicates that the immediate past returns will serve as reasonable estimates of future returns. A year earlier, investment X had a market value of $20,000; investment Y had a market value of $55,000. During the year, investment X generated cash flow of $1,500 and investment Y generated cash flow of $6,800. The current market values of investments X and Y are $21,000 and $55,000, respectively.

a. find out the expected rate of return on investments X and Y using the most recent year's data.

b. Assuming that the two investments are equally risky, which one should Douglas recommend? Why?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M944106

Have any Question? 


Related Questions in Basic Finance

The manufacturer of a fertilizer guarantees that with the

The manufacturer of a fertilizer guarantees that, with the aid of the fertilizer, 80% of planted seeds will germinate. Suppose the manufacturer is correct. If 9 seeds planted with the fertilizer are randomly selected, wh ...

The president of fly-by-night airlines has asked you to

The president of Fly-by-Night Airlines has asked you to evaluate the proposed acquisition of a new jet. The jet's price is $40 million, and it is classified in the 10-year MACRS class. The purchase of the jet would requi ...

What is the expected return and standard deviation of a

What is the expected return and standard deviation of a portfolio that is invested in stocks A, B, and C? Twenty five percent of the portfolio is invested in stock A, 40 percent is invested in stock C, and the remaining ...

Design a one-way experiment to test each of the given

Design a one-way experiment to test each of the given research hypotheses: a. The more a person tries not to think of something, the more he or she will actually end up thinking about it. b. People are more helpful when ...

Walmart or carrefour who will be master of planet retailsam

WALMART OR CARREFOUR WHO WILL BE MASTER OF PLANET RETAIL? Sam Walton began Walmart, the world's largest retailer, in 1962. Headquartered in Bentonville, Arkansas, Walmart was built on the policies of "everyday low prices ...

An article in the wall street journal discussing the fear

An article in the Wall Street Journal discussing the fear that some farmers had that regulation of derivatives would make it harder for them to hedge risk, described the situation of a feedlot owner who "uses derivatives ...

1 what is the difference between earnings per share eps

1. What is the difference between earnings per share (EPS), funds from operations (FFO), adjusted funds from operations (AFFO), and dividends per share? 2. Explain how an investor in an equity REIT may receive a current ...

What distinguishes the free cash flow of a firm from its

What distinguishes the free cash flow of a firm from its cash flow from operations? What is the relation between EBITDA and cash flow from operations? How can a negative free cash flow be considered good news? How can a ...

Explain debt-equity swaps and how they increase activity in

Explain debt-equity swaps and how they increase activity in the secondary loan market? List additional factors that deserve consideration in a foreign project analysis but are not relevant for a purely domestic project.

1 why is notional principal often exchanged in a currency

1 .Why is notional principal often exchanged in a currency swap but not in an interest rate or equity swap? Why would the parties to a currency swap choose not to exchange the notional principal ? 2 .Explain how the foll ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen