Question: A project under consideration has an internal rate of return of 14% and a beta of .6. The risk-free rate is 4%, and the expected

A project under consideration has an internal rate of return of 14% and a beta of .6. The risk-free rate is 4%, and the expected rate of return on the market portfolio is 14%.

a. What is the required rate of return on the project? Should it be accepted?

b. What is the required rate of return on the project if its beta is 1.6? Should the project be accepted in this case?

c. Why does your answer change?

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