Below are the returns of Nulook Cosmetics and the market over a three-year period: Nulook finances internally

Question:

Below are the returns of Nulook Cosmetics and "the market" over a three-year period:

Nulook 9% Year Market 6% 15% 10% 3 24% 36%

Nulook finances internally using only retained earnings, and it uses the Capital Asset Pricing Model with a historical beta to determine its cost of equity. Currently, the risk-free rate is 7 percent, and the estimated market risk premium is 6 percent. Nulook is evaluating a project which has a cost today of $2,028 and will provide estimated cash inflows of $1,000 at the end of the next 3 years. What is this project's MIRR?

Capital Asset Pricing Model
The Capital Asset Pricing Model (CAPM) describes the relationship between systematic risk and expected return for assets, particularly stocks. The CAPM is a model for pricing an individual security or portfolio. For individual securities, we make use of the security market line (SML) and its...