investment science, please don't copy answer from other post, many thanks.

(Wizards) Electron Wizards, Inc. (EWI) has a new idea for producing TV sets, and it is planning to enter the development stage. Once the product is developed (which will be at the end of 1 year), the company expects to sell its new process for a price p, with expected value p =$27M. However, this sale price , will depend on the market for TV sets at the time. By examining the stock histories of various TV companies, it is determined that the final sales price p is correlated with the market return as E[(p - P) (rm rm)] = $25M X om To develop the process, EWI must invest in a research and development project. a The cost c of this project will be known shortly after the project is begun (when a technical uncertainty will be resolved). The current estimate is that the cost will be either c =$25M or c =$15M, and each of these is equally likely. (This uncertainty is independent of the final price and is also independent of the market.) Assume that the risk-free rate is rs = 2% and the expected return on the market is rm = 30%. a = (a) What is the expected rate of return of this project? (b) What is the beta of this project? Hint: In this case, note that CM :)E E[)(m ) = (1) Elpiraus = ra). 2 - Ep(rm rm] (c) Is this an acceptable project based on a CAPM criterion? In particular, what is the excess rate of return (+ or - ) above the return predicted by the CAPM