Question

The Treasury bill rate is 2% and the market risk premium is 7%.

 

Project Beta Internal Rate of Return, %
P 0.90 10
Q 0.00 8
R 3.00 23
S 0.30 9
T 2.60 25

a. What are the project costs of capital for new ventures with betas of 0.65 and 1.65?

b. Which of the capital investments shown above have positive (non-zero) NPV's?

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