please solving steps are required for both questions 1. A taxi cab company...
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please solving steps are required for both questions
1. A taxi cab company purchases its last car for $22.000 at the beginning of the year and it is expected to have a market value of $16,000 at the end of 12 months. Over the year the car is expected to generate $35,960 in cab fees. If the company expects to pay $17,000 in wages to a driver of the cab, $6,000 in fuel costs and $3,000 in other operating expenses (which do not include the cost of capital), what is the expected 12-month return on capital assets in the same risk class as this asset? (Assume all revenues are received, and operating costs paid, at the end of the period.) What is the risk premium if the riskless rate of return is 8 per cent? 2. The risk of a portfolio is below: a2 = 0.25w2 - 0.3W + 0.09 What is the weight (w) in order to make a2 = 0
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