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Finding NPVs with differing project risks, Project selection

Assume the expected return on the market portfolio is 15% and the riskless return is 9%. Also assume that all of the projects listed here are perpetuities with annual cash flows (in $) and betas as indicated. None of the projects requires or precludes any of the other projects, and each project costs $2,000

1. Evaluate the NPV of each project and which projects should the firm undertake?

PROJECT A B C D E F

Annual cash flow 310 500 435 270 385 450

Beta 1.00 2.25 2.22 0.65 1.37 2.36

Project Management, Management Studies

  • Category:- Project Management
  • Reference No.:- M9218667

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