Please give an explanation on how you got the answer/solution. Thanks! Ch. 10 3. Calculating Dollar Returns. You purchased 250 shares of a particular stock at the beginning of the year at a price of $75.13. The stock paid a dividend of $0.85 per share, and the stock price at the end of the year was $81.64. What was your dollar return on this investment? 7. Calculating Returns and Variability. Using the following returns, calculate the average returns, the variances, and the standard deviations for X and Y. Year Returns X Y 1 21% 24% 2 – 16 -3 3 9 26 4 18 -13 5 4 30 Ch. 11 2. Portfolio Expected Return. You own a portfolio that has $1,500 invested in Stock A and $2,600 invested in Stock B. If expected returns on these stocks are 10 percent and 16 percent, respectively, what is the expected return on the portfolio? 6. Calculating Expected Return. Based on the following information, calculate the expected return. State of Economy Probability of Rate of Return State of Economy if State Occurs Recession .25 -.09 Normal .45 .11 Boom .30 .30 Ch. 12 3. Calculating Cost of Equity. Stock in CDB Industries has a beta of 0.90. The market risk premium is 7 percent, and T-bills are currently yielding 4 percent. CDB’s most recent dividend was $1.90 per share, and dividends are expected to grow at a 5 percent annual rate indefinitely. If the stock sells for $41 per share, what is your best estimate of CDB’s cost of equity? 9. Calculating WACC. Mullineaux Corporation has a target capital structure of 60 percent common stock, 5 percent preferred stock, and 35 percent debt. Its cost of equity is 12.5 percent, the cost of preferred stock is 5.5 percent, and the cost of debt is 7.2 percent. The relevant tax rate is 35 percent. a) What is Mullineaux’s WACC? b) The company president has approached you about Mullineaux’s capital structure. He wants to know why the company doesn’t use more preferred stock financing, since it costs less than debt. What would you tell the president?