Assume that the risk free rate is 4 i.e. rf 4 and the, Ask an Expert

Economics

The following table contains data on yearly return on Dell and return on S&P 500.

1. Estimate Beta or systematic risk of Dell;

2. Assume that the risk free rate is 4% (i.e. RF = 4% ) and the return on market portfolio is 10% (Rm = 10% ) use CAPM tocalculate the cost of capital of Dell.

3. Would you recommend that Dell Company invest in a project whose return is 14%? Why?

Return on Dell (RD)	Return on S&P 500 (Rm)
15	12
24	14
30	16

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M9446025

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