Question: 1 2 . The risk - free rate is 5 % . Asset Actinium ( A ) is a claim on a project with expected

12 .

The risk

-

free rate is

5 % .

Asset Actinium

(

)

is a claim on a project with expected cash flows to the asset of $

10

m at the end of year

1,

and $

20

m at the end of year

2 .

The market risk premium is expected to be

5 % .

Asset A is all

-

equity financed. The CAPM assumptions all hold. Assume that investors are concerned about the mean and variance of a security, and that investors hold diversified portfolios of many assets, what is the value of asset A today? The beta of asset A is

2 .

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