Q4: Project Risk & Beta FLIR has three divisions. They are: Division % of Assets Expected ROE 65% 25% Beta 1.45 Military Commercial 10% 13% 2.15 Government Safety 25% 21% 0.75 Using asset weights to reflect the importance of each division, what is the beta of the firm? Show all work and explain your answer carefully. Bfim = The real risk free rate is equal to 2 percent and investors expect a 1 percent rate of inflation in the indefinite future. The market return is 9 percent. What is the required return for the company? Required return = FLIR is considering a new capital investment. Analysis has indicated that the proposed investment has a beta of 1.85 and will generate an expected return of 15 percent. Should the firm undertake the investment? Explain. If the expected rate of inflation built into the risk free rate increases to 3 percentage points, does this change your answer? Explain. Assume market risk aversion stays the same. Q4: Project Risk & Beta FLIR has three divisions. They are: Division % of Assets Expected ROE 65% 25% Beta 1.45 Military Commercial 10% 13% 2.15 Government Safety 25% 21% 0.75 Using asset weights to reflect the importance of each division, what is the beta of the firm? Show all work and explain your answer carefully. Bfim = The real risk free rate is equal to 2 percent and investors expect a 1 percent rate of inflation in the indefinite future. The market return is 9 percent. What is the required return for the company? Required return = FLIR is considering a new capital investment. Analysis has indicated that the proposed investment has a beta of 1.85 and will generate an expected return of 15 percent. Should the firm undertake the investment? Explain. If the expected rate of inflation built into the risk free rate increases to 3 percentage points, does this change your answer? Explain. Assume market risk aversion stays the same