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Risk, return, and CAPMWolff Enterprises must consider one investment project using the capital asset pricing model(CAPM). Relevant information is presented in the following table.(Click on the icon located on thetop-right corner of the data table below in order to copy its contents into aspreadsheet.)

Item

Rate of return

Beta, b

Risk-free asset

7

7%

0.00

Market portfolio

11

11%

1.00

Project

1.34

1.34

a.Calculate the required rate of return for theproject, given its level of nondiversifiable risk.

b.Calculate the risk premium for theproject, given its level of nondiverisifiable risk.