Question: A project under consideration has an internal rate of return of 14% and a beta of 0.6. The risk-free rate is 9%, and the expected

A project under consideration has an internal rate of return of 14% and a beta of 0.6. The risk-free rate is 9%, and the expected rate of return on the market portfolio is 14%.

a-1.

Calculate the required return.

Required return

Should the project be accepted?
b-1.Calculate the required return if its beta is 1.6.
Required return%
b-2.Should the project be accepted?

Step by Step Solution

★★★★★

3.46 Rating (166 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

a1 To calculate the required return using the Capital Asset Pricing Model CAPM we use the f... View full answer

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!

In this assignment we will work with Microsoft Excel. I assume you all have some knowledge of Excel. We will use Microsoft Office for this assignment. It is available in the lab/classroom in the...

What type of counter circuit from Chapter 7 could control the enables in Figure 8-37 so that only one buffer is on at any time, and the buffers are enabled sequentially? Figure 8-37 Input A Input B...

Shows the graph of a function over a closed interval D. At what domain points does the function appear to be a. Differentiable? b. Continuous but not differentiable? c. Neither continuous nor...

A certain job is completed in three steps in series. The means and standard deviations for the steps are (in minutes) Assuming independent steps and normal distributions, compute the probability that...

A project under consideration has an internal rate of return of 14% and a beta of 0.9. The risk-free rate is 4%, and the expected rate of return on the market portfolio is 14%. a. What is the...

A project under consideration has an internal rate of return of 1 4 % and a beta of 0 . 9 . The risk - free rate is 4 % , and the expected rate of return on the market portfolio is 1 4 % . What is...

A project under consideration has an internal rate of return of 14% and a beta of 0.8. The risk-free rate is 4%, and the expected rate of return on the market portfolio is 14%. a. What is the...

1) The Treasury bill rate is 6%, and the expected return on the market portfolio is 12%. According to the capital asset pricing model: a. What is the risk premium on the market? b. What is the...

A project under consideration has an internal rate of return of 1 4 % and a beta of 0 . 6 . The risk - free rate is 4 % , and the expected rate of return on the market portfolio is 1 4 % . a . What...

A project under consideration has an internal rate of return of 14% and a beta of 06. The risk-free rate is 4%, and the expected rate of return on the market portfolio is 14% a. What is the required...

A project under consideration has an internal rate of return of 13% and a beta of 0.6. The risk-free rate is 3%, and the expected rate of return on the market portfolio is 13%. a. What is the...

Leatherco is contracted to manufacture batches of pants, vests. and jackets. Each product requires a special setup of the machines needed in the manufacturing processes. The following table provides...

The Fourier transform of a stable linear time-invariant system is purely real and is shown in Figure. Determine whether this system has a stable inverse system. |H(e) 77

Es el ingreso acumulable que debe considerarse para efectos del impuesto sobre la renta. Seleccione la respuesta correcta: a) Contribucion de seguridad social y medicarse b) Estmulos fiscales c)...

Marigold Marine Supply Company reported a loss of $2100 for the sale of equipment for cash. The equipment had a cost of $31200 and accumulated depreciation of $28700. How much will Marigold report in...

Some of the growth of international business can be attributed to communication and transportation advances. TRUE / FALSE

The return of goods to the supplier will affect the purchase account. Question 27Answer True False

A project currently generates sales of $10 million, variable costs equal 50% of sales, and fixed costs are $2 million. The firm's tax rate is 35%. What are the effects of the following changes on...

A firm has decided that its optimal capital structure is 100% equity-financed. It perceives its optimal dividend policy to be a 40% payout ratio. Asset turnover is sales/assets = .8, the profit...

Phoenix Industries has pulled off a miraculous recovery. Four years ago it was near bankruptcy. Today, it announced a $ 1 per share dividend to be paid a year from now, the first dividend since the...

The Centers for Disease Control and Prevention estimated in 2014 that 18.1 % of American adults smoked cigarettes. Using the 68-95-99.7 Rule, describe the sampling distribution model for the...

Suppose the class in Exercise 18 buys bigger bags of candy, with 200 M&M's each. Again the students calculate, the proportion of green candies they find. a) Explain why it's appropriate to use a...

Best known for its testing program, ACT, Inc., also compiles data on a variety of issues in education. In 2013, the company reported that the national college freshman-to-sophomore retention rate...