1. A stock has an expected return of 12.9 percent, a beta of 1.40, and the return on the market is 10.60 percent. What must the risk-free rate be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
2. Compute the payback statistic for Project B if the appropriate cost of capital is 11 percent and the maximum allowable payback period is three years. (If the project never pays back, then enter a "0" (zero).) Project B Time: 0 1 2 3 4 5 Cash flow: –$11,700 $3,420 $4,320 $1,660 $0 $1,140 Should the project be accepted or rejected?
3. What is the future value of $825 deposited for one year earning an interest rate of 8 percent per year?