6. Knudsen believes that the values given in Table 2 are valid for those types of companies in the United States , but he does not feel that they are a suitable basis for an accept / reject decision for a Cayennean project . Rather , he feels that he should employ the capital asset pricing model ( CAPM ) to account for the amount of risk that is inherent in each project .' After careful consideration , he has derived the following values for use in the CAPM : Ki = RF : + bi ( KM - RF ) = 10% + bi ( 16%0- 10% ) = 10. 0% + b; ( 6.0% ) Ki = risk - adjusted discount rate appropriate for the ith project . RF = riskless rate of interest ; Knudsen uses 10 percent based on historical data ." KM = expected return on " the market . " Again , Knudsen uses historical data . bi = the beta coefficient of the ith project