INTEREST 8%

ANNUAL DEPOSIT 34284.3095008084

ANNUAL WITHDRAWL 35000

ACCOUNT balance at START OF YEAR INTEREST EARNED AT START

YEAR start of year DEPOSIT OF YEAR
1 0 34284.3095008084 2742.74476006467
2 37027.0542608731 34284.3095008084 5704.90910093452
3 77016.2728626161 34284.3095008084 8904.04658907396
4 120204.628952498 34284.3095008084 12359.1150762645
5 166848.053529571 34284.3095008084 16090.5890424304
6 217222.95207281 -35000 14577.8361658248
7 196800.788238635 -35000 12944.0630590908
8 174744.851297726 -35000 11179.5881038181
9 150924.439401544 -35000 9273.95515212351
10 125198.394553667 -35000 7215.87156429339
11 97414.2661179608 -35000 4993.14128943687
12 67407.4074073977 -35000 2592.59259259181
13 34999.9999999895 -35000 -8.40518623590469E-10
 Q1

TOTAL ACCOUNT AT END YEAR UMER HANEEF

37027.0542608731
77016.2728626161
120204.628952498 01-220172-042
166848.053529571
217222.95207281
196800.788238635
174744.851297726
150924.439401544 MBA 6A
125198.394553667
97414.2661179608
67407.4074073977
34999.9999999895
0.0
MER HANEEF
01-220172-042

MBA 6A
Answer No 4
Q2(A)
GIVEN DATA
Rf 6%
Rm 15%
C. Tax 40%
β equity 1.50 Using Clasical CAPM Approach
β debt 0.4
Equity 40%
Debt 60% Cost of Debt
Solution CAPM (rd) = Rf+B(Rm-Rf)
(Part a) Cost of Equity = 0.06+0.4(0.15-0.06)
CAPM ( re) = Rf+B(Rm-Rf) = 0.096
= 0.06+1.5(0.15-0.06)
= 0.1950

Using Tax Adjusted CAPM

Cost Of Equity Cost of Debt

Re = rf+B(ErM-rf)+T*rf(B-1) Rd = rf+b(Erm-rf)+T*rf(B-1)
= 0.06+1.5(0.15-0.06)+(0.4)(0.06)(1.5-1) = 0.06+0.4(0.15-0.06)+0.4*0.06(0.4-1)
= 0.207 = 0.0816
 Q2(A)

WACC
WACC = E*Re+D*Rd(1-T)
= 0.4(0.1950)+0.6(0.096)(1-0.4)
WACC = 11.26%

WACC

rf)+T*rf(B-1) WACC = E(re)+=D(rd)(1-T)

0.15-0.06)+0.4*0.06(0.4-1) = 0.4(0.207)+0.6(0.0816)(1-0.4)
= 0.112176
QUESTION#2 Question 2 Part B
CF1 100
Growth
Rate 10%
Discount
Rate 15%
years 5

years 0 1 2 3 4 5
CFs -500 100 110 121 133.1 146.41
DCFs -500 86.95652 83.1758 79.55946 76.10036 72.79165
NPV -101.4162
IRR 7%
npv irr Discount Rates
-101.4162 7% -101.4162 0%
0% 0 0 0%
3% 0.03 0.03 3%
6% 0.06 0.06 6%
9% 0.09 0.09 9%
12% 0.12 0.12 12%
n 2 Part B Q2(B)

Discount Rates
3% 6% 9% 12% 15% 18% 21% 24%
 QUESTION # 3 Q3(A)
(A) (B)
GIVEN DATA GIVEN DATA
2 12 6 1 1 2 2
4 8 7 + 8 0 -23 5
1 0 -9 1 7 3 6

3 13 8
12 8 -16
2 7 -6

TRANSPOSE
3 12 2
13 8 7
8 -16 -6
 Q3(A)
(C)
GIVEN DATA GIVEN DATA
-9 3 1 1 2 0 6
0 2 3 2 4 8 7
-6 1 0 -9

-12 -25 -16 8

15 5 5 75
6 -12 -6 -8

TRANSPOSE TRANSPOSE
-12 15 6 8
-25 5 -12 44
-16 5 -6 22
 1 1 2
8 0 -2
1 7 3

44 22
53 13
-62 -25

TRANSPOSE
75 -8
53 -62
13 -25
QUESTION# 3 Q3(B)
(B)
GIVEN DATA INVERSE OF THE FOLLOWING

20 2 3 -3 0.052388 -0.008416 -0.004757 0.00555

2 10 2 -2 -0.008416 0.104379 -0.006221 0.007257
3 2 40 9 -0.004757 -0.006221 0.02754 -0.00832
-3 -2 9 33 0.00555 0.007257 -0.00832 0.033517
Q3(B)
 Question # 4

Mean
Netsol Suzuki Honda Fauji Fert Target Nishat
returns
Netsol 0.0052 0.0033 0.0015 0.0039 0.0068 0.001 0.24%
Suzuki 0.0033 0.012 0.0034 0.0072 0.0063 0.0015 -0.89%
Honda 0.0015 0.0034 0.0046 0.0058 0.0039 0.0015 0.48%
Fauji Fert 0.0039 0.0072 0.0058 0.0379 0.0073 0.0023 0.44%
Target 0.0068 0.0063 0.0039 0.0073 0.0389 0.0023 -1.46%
MCB 0.001 0.0015 0.0015 0.0023 0.0023 0.0018 1.04%

A Netsol Suzuki Honda Fauji Fert Target Nishat

Portfolio x 0.2 0.25 0.1 0.1 0.2 0.15
portfolio y 0.2 0.1 0.1 0.15 0.15 0.3

Statisrtics of portfolio X& Y: mean,varaince,covariance,corelation

X Y
Mean -0.002185 0.00166
Varainces 0.6218% 0.4905%
coverainces 0.00536875
corelation 0.97218844

Return calculation for combination of portfolio X & Y

proportion of X 0.45
mean port retur -0.01%
varaince of port 0.540%
sc of port p 7.349%
 Q4

Porportion o SD Mean
7.349% -0.01%
Mean
0 0.00%
6.000% 7.000% 8.000% 9.000% 10.000% 11.000% 12.
1 0.00%
0.2
0.3 0.00%
0.4 0.00%
0.5
0.6 0.00%

0.7 -0.01%
0.8
-0.01%
0.9
1 -0.01%
1.1
-0.01%
1.2
 Mean
.000% 9.000% 10.000% 11.000% 12.000% 13.000% 14.000% 15.000%
 variance-covariance matrix Means

σA σB σC σD σE σF
σA 0.0052 0.0033 0.0015 0.0039 0.0068 0.001 0.24%
σB 0.0033 0.0120 0.0034 0.0072 0.0063 0.0015 -0.89%
σC 0.0015 0.0034 0.0046 0.0058 0.0039 0.0015 0.48%
σD 0.0039 0.0072 0.0058 0.0379 0.0073 0.0023 0.44%
σE 0.0068 0.0063 0.0039 0.0073 0.0389 0.0023 -1.46%
σF 0.001 0.0015 0.0015 0.0023 0.0023 0.0018 1.04%

Rf 0.45%
 Q4©
Efficient
portfolio
11.06%
-46.78%
-6.07%
2.59%
-18.46%
157.67%
 Question # 5 Q5
(a)
Months S&P 500 Terra data
1 911.62 13.19 SUMMARY OUTPUT
2 916.07 13.82
3 815.28 10.48 Regression Statistics
4 885.76 11.18 Multiple R 0.9615485387
5 936.31 14.92 R Square 0.9245755922
6 879.82 13.1 Adjusted R 0.9203853474
7 855.7 13.37 Standard E 1.2863645667
8 841.15 13.98 Observatio 20
9 848.18 12.98
10 916.92 15 ANOVA
11 963.59 16.41 df SS MS F
12 974.5 16.79 Regression 1 365.11625 365.1162 220.6495
13 990.31 19.49 Residual 18 29.785208 1.654734
14 1008.01 19.14 Total 19 394.90146
15 995.97 19.59
16 1050.71 20.93 Coefficients Standard Errt Stat P-value
17 1058.2 22.7 Intercept -25.582620746 2.8816549 -8.877753 5.396E-08
18 1111.92 24.23 X Variable 0.0442825135 0.0029811 14.85428 1.518E-11
19 1131.13 25.71
20 1144.94 23.16

intercept -25.58262
slope 0.044283

(b) Linest command

slope 0.044283 -25.58262 intercept

strd err of 0.002981 2.881655 strd error of intercept
R2 0.924576 1.286365 strd error of value
F statistics 220.6495 18 degree of freedom
ssxy 365.1162 29.78521 sse
 Q5

Significance F
1.518E-11

Lower 95%Upper 95%Lower 95. Upper 95.0%

-31.63675 -19.52849 -31.63675 -19.52849
0.038019 0.050546 0.038019 0.050546