How many years would it take for Jughead to save an adequate ...

[cabate]

How many years would it take for Jughead to save an adequate amount for retirement if he deposits 2,000 per month into an account beginning today that pays 12 percent per year if he wishes to have a total of 1,000,000 at retirement?
 
  A) 13 years
  B) 16 years
  C) 15 years
  D) 12 years

Question 2

Dr. Dan is considering investment in a project with beta coefficient of 1.75. What would you recommend him to do if this investment has an 11.5 percent rate of return, risk-free rate is 5.5 percent,
 
  and the rate of return on the market portfolio of assets is 8.5 percent?

[vish98]

Answer to Question 1

C

Answer to Question 2

r = RF + b(rm - RF)
= 0.055 + 1.75(0.085 - 0.055 ) = 0.108 = 10.75
Dr. Dan should invest in the project because the project's actual rate of return (11.5 percent) is greater than the project's required rate of return (10.8 percent).