A project under consideration has an internal rate of return of 14% and a beta of 0.6. The risk-freerate is 996, and the expected rate of return on the market portfolio is 14%.a-1.Calculate the required return.Required returna-2.Should the project be accepted?YesNob-1.Calculate the required return if its beta is 1.6.Required returnb-2Should the project be accepted?YesNo

Financial statements are statements which states the business activities performed by the company .…

A project under consideration has an internal rate of return of 1496 and a beta of 0.6. The risk-free rate is 99%, and the expected rate of return on the market portfolio is 149%. a-1. Calculate the required return. Required return a-2. Should the project be accepted? Yes No b-1. Calculate the required return if its beta is 1.6. Required return 96 b-2 Should the project be accepted? Yes No

A project under consideration has an internal rate of return of 1496 and a beta of 0.6. The risk-free rate is 99%, and the expected rate of return on the market portfolio is 149%. a-1. Calculate the required return. Required return a-2. Should the project be accepted? Yes No b-1. Calculate the required return if its beta is 1.6. Required return 96 b-2 Should the project be accepted? Yes No

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A project has a beta of 1.25, the risk-free rate is 5.0%, and the market rate of return is 9.2%. What is the project's expected rate of return?
If the net present value of a project is zero based on a discount rate of 16%, then the internal rate of return is: Select one: O a. equal to 16% O b. greater than 16% O c. less than 16% O d. cannot be determined from this data
A project under consideration has an internal rate of return of 16% and a beta of 0.9. The risk free rate is 6% and the expected rate of return on the market portfolio is 16%. A. What is the required rate of return? B. Should the project be accepted? C. What is the required rate of return on the project if it's beta is 1.90? D. If the projects beta is 1.90 should the project be accepted?
In a few sentences, answer the following question as completely as you can. According to your textbook, “an investment should be accepted if the net present value is positive and rejected if it is negative” (p. 239). What does an NPV of zero mean?If you were a financial decision maker facing a project with NPV of zero (or close to zero) what would you do? Can you think of any other factors that might influence your decision?
Consider the following figure. If firm A were to use the average or composite WACC it would Rate of Return 13.0 (5) 11.0 10.0 90 Project L 70 70 Division L's WACC О Riskov Division H's WACC WACC Project H Composite WACC Firm A Risk Riskov O accept Project L and reject Project H O be making the right decisions on acceptance or rejection of both projects O accept both Project L and Project H O reject both Project L and Project H O accept Project H and reject Project L
Modigliani and Associates has forecasted the following payoffs from a project: Outcome Probability of Outcome Assumptions $ 0 20% pessimistic $ 3,500 60% moderately successful $ 6,000 20% optimistic What is the expected value of the outcomes?
Pronto Email service has a beta of 0.95 and a cost of equity of 11.9 percent. The risk-free rate of return is 2.8 percent. The firm is currently considering a project that has a beta of 1.03 and a project life of 6 years. What discount rate should be assigned to this project? a. 13.33% b. 13.84% c. 12.67% d. 13.62%
A project has a beta of 0.91, the risk-free rate is 3.5%, and the market risk premium is 8.0%. The project's expected rate of return is %.
None
A project under consideration has an internal rate of return of 17% and a beta of 0.5. The risk-free rate is 9% and the expected rate of return on the market portfolio is 17%. 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 the beta is 1.50? D. If projects beta is 1.50, should the project be accepted?
Why is that the answer ? Full workings and explanation would be amazing because I don't know how to do this at all. Thank you !
Which of the following statements is correct? a. Since investors prefer more return and less risk, one will never hold a dominated asset in the risk-return sense. In other words, if asset A has a higher expected return and lower standard-deviation than asset B, then investors would only hold asset A in their optimal portfolio. b. The IRR method correctly ranks mutually exclusive projects. c. When an investment project is evaluated today, the spending that occurred in the last year has to be included in the NPV analysis. d. The payback period criterion properly considers the time value of money. e. When there are two mutually exclusive projects, the project with the highest NPV should be chosen.

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