Suppose expected return on market portfolio is 15% and riskless return is 9%. Also suppose that all the projects given here are perpetuities with annual cash flows (in $) and betas as indicated. None of the projects needs or precludes any other projects, and each project costs $2,000
1. Determine the NPV of each project?
2. Which projects must 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