roshanmehta427

1. produces a hard disk drive that sells for $140 per unit. The cost of producing 20,000 drives in the prior year was:

Direct Material

$ 500,000

Direct Labor

$ 300,000

Variable Overhead

$ 100,000

Fixed Cost

$ 1,200,000

Total Cost

$ 2,100,000

At the start of the current year, the company received an order of 2,000 drives from a computer company in china. Management of GK, Inc. has mixed felling about the order. On one hand they welcome the order because they currently have excess capacity. Also, this is company’s first international order. On the other hand, the company in China is only willing to pay $100 per unit.

You are given the following rates of return on two companies, X and Y, for the recent five years.

Year X (%) Y (%)

2017 20 24

2018 4 12

2019 -6 16

2020 8 -4

2021 24 40

Required: 

(a) Calculate the mean return and standard deviation on X and Y based on the information above. (2 marks)

(b) Calculate the coefficient of correlation for these two stocks. (2 marks)

(c) Plot an efficient frontier. Note that the portfolio weights should range from 0 to 1 by the increment of 0.2. (8 marks)

(d) In relation to this question explain the concept of risk diversification.    (3 marks)

Dexter ltd is planning to raise money from the capital markets. Sensex is expected to give 10% return in the last one year. The 10-year government yield going rate is 8%. The Covariance of the Rm and IPOs is 0.12 and their market variance is 0.9. Calculate the cost of equity based on CAPM model

In the absence of partnership deed, the allowable rate of interest on partner's
loan account will be * 
(1 Point)
1.
6%
6% p.a.
12%
12% p.a.

A firm has a net profit margin of 6% on sales of birr 4,000,000 in 2008. If the firms times interest earned ratio is 6 and its in a 40% tax bracket, what was the amount of interest expense for the year?