Question
In: Finance
A project has a beta of 1.3. The risk-free return is 2% and the return on...
A project has a beta of 1.3. The risk-free return is 2% and
the return on the market is 12%. The project has an IRR of
14%.
a) If the firm’s cost of capital is 10%, will they take the
project using the cost of capital?
b) Using the CAPM to determine project risk, will they take
the project?
c) Which method is better for analyzing this project?
Why?
Solutions
jeff jeffy answered 8 months agoRelated Solutions
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company needs to finance its new project under two different
scenarios.
Scenario Debt ratio Interest rate EPS
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2 30% 10% $3.40
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b)$26.50
c)$24.30...
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