Question: Problem 9 - 2 2 Certainty equivalents A project has the following forecasted cash flows: The estimated beta is 1 . 5 6 . The

Problem 9-22 Certainty equivalents
A project has the following forecasted cash flows:
The estimated beta is 1.56. The market return is 16%, and the risk-free rate is 4%.
a. Estimate the cost of capital for the project and the project's PV.
b. What are the certainty equivalent cash flows in each year?
c. What is the ratio of the certainty-equivalent cash flow to the expected cash flow in each
year?
Problem 9-22 Certainty equivalents A project has the following forecasted cash

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