Exe.CAPM.8.1
Exe.CAPM.8.1
Completion requirements
On the basis of the behavior of the firm’s stock, you believe that the beta of firm is 1,4. Assuming that the rate of return available on risk-free investment is 4% and that the expected rate of return on the market portfolio is 12%, what is the net present value of the project?
Opened: Sunday, 17 November 2019, 12:00 AM
Due: Sunday, 24 November 2019, 12:00 AM
13. CAPM and Valuation.
You are consultant to a firm evaluating an expansion of its current business. The cash-flow forecasts (in millions of dollars) for the project are as follows:
|
Years |
Cash Flow |
|
0 |
-100 |
|
1-10 |
+15 |
On the basis of the behavior of the firm’s stock, you believe that the beta of firm is 1,4. Assuming that the rate of return available on risk-free investment is 4% and that the expected rate of return on the market portfolio is 12%, what is the net present value of the project?