Question: Manual solution please 1) Polycorp's existing assets (projects) have a average beta of 1.2. The market risk premium is 5% and the risk free rate

Manual solution please

1) Polycorp's existing assets (projects) have a average beta of 1.2. The market risk premium is 5% and the risk free rate is 3%. What is the risk adjusted rate of return RADR required for these assets (the cost of capital of the existing assets)?

2) Polycorp is considering a new project. The project has beta () that is twice that of the firm's existing assets (projects). Polycorp's existing assets have a required return (cost of capital) of 10%, the market risk premium is 5% and the risk free rate is 4%. Calculate the beta for the new project.

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