# You purchase 100 shares of COST for \$280 per share. Three months

You purchase 100 shares of COST for \$280 per share. Three months later, you sell the stock for \$290 per share. You receive a dividend of \$0.57 a share. What is the EAR of your investment?
Your portfolio has had a 15% rate of return with a standard deviation of 18% and a beta of 1.1. The average return for the S&P 500 has been 11%, and the average return for US Treasury bills has been 2%. Calculate the Sharpe ratio, Treynor ratio, and Jensen’s alpha for your portfolio.
Westland Manufacturing spends \$20,000 to update the lighting in its factory to more energy-efficient LED fixtures. This will save the company \$4,000 per year in electricity costs. The company estimates that these fixtures will last for 10 years. What is the IRR of this project?
You will be living in your college town for two more years. You are considering purchasing a townhouse that will cost you \$250,000 today. You estimate that if you do, your expenses for each of the next two years will be \$6,000 less than if you rented an apartment. You think that you would be able to lease the townhouse to another college student afterward for \$12,000 per year and that your taxes, maintenance, and other expenses for the townhouse would be \$5,000 per year. You expect to lease the townhouse for five years before you sell it, and you expect to be able to sell the townhouse for \$275,000. Use Excel to create an NPV profile for this undertaking. If it will cost you 3% to borrow money, should you buy the townhouse? What if it will cost you 8% to borrow money?