Question: 6. Fay thinks that while the data in Table 2 may be relevant for industries in the United States, the values do not adequately

6. Fay thinks that while the data in Table 2 may be relevant for industries in the United States, the values do not adequately reflect the degree of risk inherent in international projects. Accordingly, he plans to use the capital asset pricing model (CAPM) to adjust for differential risk: Ki = KRF + (KM - KRF)bi = 8% + (15% - 8%) bi = 8% + (7%)bi.

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