Rate of return Douglas Keel, a financial analyst for Orange Industries, wishes to estimate the rate of return for two similar-risk investments, X and Y. Douglas's research indicates that the immediate past returns will serve as reasonable estimates of future returns. A year earlier, investment X had a market value of $12,000, and investment Y had a market value of $67,000. During the year, investment X generated cash flow of $900 and investment Y generated cash flow of $7,755. The current market values of investments X and Y are $12,809 and $67,000, respectively. a. Calculate the expected rate of return on investments X and Y using the most recent year's data. b. Assuming that the two investments are equally risky, which one should Douglas recommend? Why? OOO a. The expected rate of return on investment X is% (Round to two decimal places.)
Rate of return Douglas Keel, a financial analyst for Orange Industries, wishes to estimate the rate of return for two similar-risk investments, X and Y. Douglas's research indicates that the immediate past returns will serve as reasonable estimates of future returns. A year earlier, investment X had a market value of $12,000, and investment Y had a market value of $67,000. During the year, investment X generated cash flow of $900 and investment Y generated cash flow of $7,755. The current market values of investments X and Y are $12,809 and $67,000, respectively. a. Calculate the expected rate of return on investments X and Y using the most recent year's data. b. Assuming that the two investments are equally risky, which one should Douglas recommend? Why? OOO a. The expected rate of return on investment X is% (Round to two decimal places.)
Chapter10: Valuing Early-stage Ventures
Section: Chapter Questions
Problem 3EP
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Hi there help me with this its kinda easy for you please cross check once after doing ( by eyes only)
![Rate of return Douglas Keel, a financial analyst for Orange Industries, wishes to estimate the rate of return for
two similar-risk investments, X and Y. Douglas's research indicates that the immediate past returns will serve as
reasonable estimates of future returns. A year earlier, investment X had a market value of $12,000, and investment Y
had a market value of $67,000. During the year, investment X generated cash flow of $900 and investment Y
generated cash flow of $7,755. The current market values of investments X and Y are $12,809 and $67,000,
respectively.
a. Calculate the expected rate of return on investments X and Y using the most recent year's data.
b. Assuming that the two investments are equally risky, which one should Douglas recommend? Why?
a. The expected rate of return on investment X is% (Round to two decimal places)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0a83a40f-5a08-4d5b-9d12-af75a97c3308%2F2277e9ce-a9fb-4130-89a9-d9ef5f8e99a9%2Faewubyb_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Rate of return Douglas Keel, a financial analyst for Orange Industries, wishes to estimate the rate of return for
two similar-risk investments, X and Y. Douglas's research indicates that the immediate past returns will serve as
reasonable estimates of future returns. A year earlier, investment X had a market value of $12,000, and investment Y
had a market value of $67,000. During the year, investment X generated cash flow of $900 and investment Y
generated cash flow of $7,755. The current market values of investments X and Y are $12,809 and $67,000,
respectively.
a. Calculate the expected rate of return on investments X and Y using the most recent year's data.
b. Assuming that the two investments are equally risky, which one should Douglas recommend? Why?
a. The expected rate of return on investment X is% (Round to two decimal places)
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