Question: A project under consideration has an internal rate of return of 12% and a beta of 0.8. The risk-free rate is 7%, and the expected

A project under consideration has an internal rate of return of 12% and a beta of 0.8. The risk-free rate is 7%, and the expected rate of return on the market portfolio is 12%.

a.What is the required rate of return on the project?(Do not round intermediate calculations. Enter your answer as a whole percent.)

b.Should the project be accepted?

c.What is the required rate of return on the project if its beta is 1.80?(Do not round intermediate calculations. Enter your answer as a whole percent.)

d.If project's beta is 1.80, should the project be accepted?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!