29. CAPM and Hurdle Rates. A project under consideration has an internal rate of return of 14% and a beta of .6. The risk-free rate is 4%, and the expected rate of return on the market portfolio is 14%. (LO12-3) a. What is the required rate of return on the project? b. Should the project be accepted? c. What is the required rate of return on the project if its beta is 1.6? d. Should the project be accepted in this case?

29. CAPM and Hurdle Rates. A project under consideration has an internal rate of return of 14% and a beta of .6. The risk-free rate is 4%, and the expected rate of return on the market portfolio is 14%. (LO12-3) a. What is the required rate of return on the project? b. Should the project be accepted? c. What is the required rate of return on the project if its beta is 1.6? d. Should the project be accepted in this case?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter11: Capital Budgeting And Risk

Section: Chapter Questions

Problem 6P

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A project under consideration has an internal rate of return of 13% and a beta of 0.6. The risk-free rate is 8%, and the expected rate of return on the market portfolio is 13%. a. What is the required rate of return on the project? (Do not round intermediate calculations. Enter your answer as a whole percent.) b. Should the project be accepted? Y/N c. What is the required rate of return on the project if its beta is 1.60? (Do not round intermediate calculations. Enter your answer as a whole percent.) d. If project's beta is 1.60, should the project be accepted? Y/N
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