CHE249H1 Lecture Notes - Lecture 11: Mansfield, Capital Asset Pricing Model

• School: UTSG
• Department: Chemical Engineering and Applied Chemistry
• Course: CHE249H1
• Professor: Yuri Lawryshyn

Document Summary

Rf =2 , rm=6 , xyz=1,2,cca rate for robots 20 , consider tax rate=0 , tax rate=40. Pw savings+ p w depreciation p w install(1 t ) Pw save=annual savings ( 1 t ) ( p / a ,6. 8 ,5) Pw depreciation=fc cct f new sv cct f old ( p / f , 6. 8 , 5: k in new machine (cca = 20%), 6-year life. Revenues increase by 85k in year 1, then 4. 5% over 6 years, not accouning for inlaion. Oc = 40% revenue, salvage is 40k, 1. 5% inlaion, rf = 2%, em = 6%, beta = 0. 89, tax = 35%, abc all equity. So use capm for marr = e[rc] = 2% + 0. 89*(6%-2%) = 5. 56% Don"t need to consider what the 4. 5% in actual terms is, because everything is actual? inf. Pw rev=( 1 t )( 1 oc )[85 ( p/ geom , r , g , 6 )]