Economics Homework Help

Solve 2 questions in the attach file in Word and Excel form

1- The table below presents the expected returns and betas for five investment funds.

• Determine
  the intrinsic value of Boeing using a three-stage growth model based on
  the following expectations (consider using an Excel spreadsheet to do
  your calculations):

Funds	Expected Returns	Beta
Index Fund	10.0%	1.00
Value Fund	14.0%	1.50
Growth Fund	12.5%	1.25
Small Cap	15.0%	1.75
Large Cap	8.0%	0.75

• Using
  the Large Cap fund and the Small Cap fund, solve for the allocations
  needed to create a zero-market risk portfolio. What isthe rate of return
  for that portfolio?(Hint: βp = w1β1 + w2β2, where w2 = (1-w1)).
• Using
  the Large Cap fund and the Small Cap fund, solve for the allocations
  needed to create portfolio with a beta of one. What is the rate of
  return for that portfolio? ?(Hint: βp = w1β1 + w2β2, where w2 = (1-w1))
• 2-
  Determine whether the Index, Value, and Growth funds have return and
  beta combinations above or below the line you generated. Explain the
  arbitrage strategy you would form with each of these funds. What
  conclusions do you draw

• Three growth-rate stages: growth, transition, and mature.
• The stock’s discount rate is 9%.
• Current EPS is $6.41.
• Dividend payout ratio is equal to 30% until the transition period.
• Dividend payout ratio is equal to 50% in the maturity stage.
• Dividend payout ratio decreases by equal annual increment from 30% to 50% during the transition stage.
• Boeing will experience a growth stage for the next 10 years in which its EPS will grow at 10%.
• The length of Boeing’s transitional stage is five years.
• The mature growth period starts in year 16 with an assumed dividend payout ratio of 50% and with a growth rate of 6%.
• The transition period starts in year 11 with the growth rate decreasing by equal annual increments from 10% to 6%.
• The value of Boeing at the beginning of the Maturity stage (Year 16) is
  determined by the constant growth model (Vt =Dt+1/(k − g)).