Consider a risky portfolio. The end-of-year cash flow derived from the portfolio will be either $50,000 or $155,000, with equal probabilities of 0.5. The alternative riskless investment in T-bills pays 6%.
(a) If you require a risk premium of 8%, how much will you be willing to pay for the portfolio?
(b) Suppose that the portfolio can be purchased for the amount you found in (a). What will be the expected rate of return on the portfolio?
(c) Now suppose that you require a risk premium of 12%. What is the price that you will be willing to pay?

Speedy auto repairs uses a job-order costing system. the company’s direct materials consist of replacement parts installed in customer vehicles, and its direct labor consists of the mechanics’ hourly wages. speedy’s overhead costs include various items, such as the shop manager’s salary, depreciation of equipment, utilities, insurance, and magazine subscriptions and refreshments for the waiting room. the company applies all of its overhead costs to jobs based on direct labor-hours. at the beginning of the year, it made the following estimates: direct labor-hours required to support estimated output 20,000 fixed overhead cost $ 350,000 variable overhead cost per direct labor-hour $ 1.00 required: 1. compute the predetermined overhead rate. 2. during the year, mr. wilkes brought in his vehicle to replace his brakes, spark plugs, and tires. the following information was available with respect to his job: direct materials $ 590 direct labor cost $ 109 direct labor-hours used 6