A project is being evaluated for investment over a 5-yearperiod. The asset beta is 1.1....

A project is being evaluated for investment over a 5-year period. The asset beta is 1.1. The market premium is the historical value of 5.7% and the risk-free rate is 1.7% (for the 5-year period). What is the expected return for this project?

Expert Solution

The expected return is computed as follows:

= Risk free rate + Beta x Market premium

= 1.7% + 1.1 x 5.7%

= 7.97%

jeff jeffy answered 2 years ago

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