The risk-free rate of return is 8%, the expected rate of return on the market portfolio is 15%, and the stock of xyrong corporation has a beta coefficient of 1.2. xyrong pays out 40% of its earnings in dividends, and the latest earnings announced were $10 per share. dividends were just paid and are expected to be paid annually. you expect that xyrong will earn an roe of 18% per year on all reinvested earnings forever. a) what is the intrinsic value of a share of xyrong stock? b) if the market price of a share is currently $103, and you expect the market price to be equal to the intrinsic value one year from now, what is your expected one-year holding-period return on xyrong stock?

Evelyn would like to open a small business that is categorized as a being in the distribution industry. to do this she could open a establishment.

Steele bicycle manufacturing company currently produces the handlebars used in manufacturing its bicycles, which are high-quality racing bikes with limited sales. steele produces and sells only 10,000 bikes each year. due to the low volume of activity, steele is unable to obtain the economies of scale that larger producers achieve. for example, steele could buy the handlebars for $31 each: they cost $34 each to make. the following is a detailed breakdown of current production costs: after seeing these figures, steele's president remarked that it would be foolish for the company to continue to produce the handlebars at $34 each when it can buy them for $31 each. calculate the total relevant cost. do you agree with the president's conclusion?

The school cafeteria can make pizza for approximately $0.30 a slice. the cost of kitchen use and cafeteria staff runs about $200 per day. the pizza den nearby will deliver whole pizzas for $9.00 each. the cafeteria staff cuts the pizza into eight slices and serves them in the usual cafeteria line. with no cooking duties, the staff can be reduced by half, for a fixed cost of $75 per day. should the school cafeteria make or buy its pizzas?