My Math Forum problems calculating beta asset and CAP-model

 Economics Economics Forum - Financial Mathematics, Econometrics, Operations Research, Mathematical Finance, Computational Finance

 April 6th, 2015, 02:22 AM #1 Newbie   Joined: Apr 2015 From: Sweden Posts: 1 Thanks: 0 problems calculating beta asset and CAP-model Hi, having trouble with these questions. Hope that someone could help me out! These exercises should somehow be done using the CAP-model (2nd one) and depreciation in balance sheet (1st one). 1. A firm could sell an existing machine for 2,2 million €. This equipment was acquired 4 years ago at 4,2 million €. The book value of the machine has been depreciated using straight line depreciation with a 6 year expected life and no salvage value assumed after six years. Income tax rate for the firm is 20%. What is the increase in the firm's free cash flow caused by the selling the existing machine? (Right answer is about 1.1 million euros) 2. The expected free cash flow for the next period of a company's oil exploration is estimated at 450m€. Beta asset is 1,4 with expected annual growth rate 4.0%. The risk free rate of interest is 2% and the market risk premium is 5%. What is the value of the oil exploration division? (Correct answer should be about 9000m€)

 Tags asset, beta, calculating, capmodel, problems

 Thread Tools Display Modes Linear Mode

 Similar Threads Thread Thread Starter Forum Replies Last Post boneraw Economics 0 September 30th, 2014 09:37 AM DeathRobot Economics 1 December 15th, 2013 01:53 AM Dean1884 Algebra 7 August 5th, 2013 12:45 PM Dean1884 Algebra 11 August 3rd, 2013 02:13 AM chamilka Real Analysis 3 July 2nd, 2012 10:28 PM

 Contact - Home - Forums - Cryptocurrency Forum - Top