Question: Firm A has a project available that offers a 10% return on average . Suppose Risk free rate = 2% The stock market return premium

Firm A has a project available that offers a 10% return on average .

Suppose Risk free rate = 2%

The stock market return premium (Rm - Rf) is 7%, Beta = 1.3 (assume alpha = 0).All returns are on an annual basis.

Should Company A go ahead with this project?

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