C1 = 68100 C2 =91200 R = 45100 A ) Select the best project using Return on Investment ROI ( Rate of Return ) method the data of both projects are shown the table below. B ) Compare the effect of decrease in revenues of Annual revenues of 5 % on the rate of return for project Y ( calculate the % of change in ROI
Risk and return
Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.
Capital Asset Pricing Model
Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.
C1 = 68100
C2 =91200
R = 45100
A ) Select the best project using
B ) Compare the effect of decrease in revenues of Annual revenues of 5 % on the rate of return for project Y ( calculate the % of change in ROI ).
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