1) Thomas has the 5-stock portfolio which has the market value equal to= $400,000. Portfolio's beta is 1.5. Thomas is allowing for selling particular stock to aid pay some university expenses. Stock is valued at= $100,000, and if he sells it, portfolio's beta will raise to 1.8. Determine the beta of stock Thomas is considering selling?
2) Which of the employee benefits has greater value? (Suppose a 28%tax rate.)
a) A non-taxable pension contribution of= $4,300 or use of the company car with taxable value of=$6,325. Non-taxable contribution of= $4,300 has taxable-equivalent of= $5,972.22. Taxable company car has the after-tax equivalent of= $4,554. The non-taxable pension contribution has greater value.
b) A life insurance policy with the taxable value of= $450 or a non-taxable increase in health insurance coverage valued at= $340. Taxable life insurance has the after-tax equivalent of= $324. The non-taxable rise in health insurance has the taxable equivalent of= $472.22. Non-taxable health insurance is the better value.