The Treasury bill rate is 5% and the market risk premium is 7%.
| Project |
Beta |
Internal Rate of Return, % |
| P |
|
.85 |
|
|
18 |
|
| Q |
|
0 |
|
|
14 |
|
| R |
|
2.0 |
|
|
18 |
|
| S |
|
.25 |
|
|
15 |
|
| T |
|
1.5 |
|
|
20 |
|
a. What are the project costs of capital for new ventures with betas of .60 and 1.57? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
Beta Cost of capital
.60 %
1.57 %
b. Which of the capital investments shown above have positive (non-zero) NPV's? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.)
Project P
Project Q
Project R
Project S
Project T