a. What are the project costs of capital for new ventures with betas of 0.70 and 1.59? (Do not round intermediate calculations. your answers as a percent rounded to 2 decimal places.) Beta Cost of Capital 0.7 % 1.59 % b. Which of the capital investments shown above have positive (non-zero) NPV's? (You may select more than one answer. S the box with the question mark to produce a check mark for a correct answer and double click the box with the question
a. What are the project costs of capital for new ventures with betas of 0.70 and 1.59? (Do not round intermediate calculations. your answers as a percent rounded to 2 decimal places.) Beta Cost of Capital 0.7 % 1.59 % b. Which of the capital investments shown above have positive (non-zero) NPV's? (You may select more than one answer. S the box with the question mark to produce a check mark for a correct answer and double click the box with the question
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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![### Transcription for Educational Use:
**16**
a. What are the project costs of capital for new ventures with betas of 0.70 and 1.59? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
| Beta | Cost of Capital |
|------|-----------------|
| 0.7 | ____% |
| 1.59 | ____% |
b. Which of the capital investments shown above have positive (non-zero) NPVs? (You may select more than one answer. 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 S
- [ ] Project T
- [ ] Project R
**Instructions:**
For question (a), calculate the cost of capital for the given betas. Ensure your final answers are represented as percentages and are accurate to two decimal places.
For question (b), evaluate which of the projects have a positive Net Present Value (NPV) by selecting the corresponding checkboxes. Multiple selections are allowed.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6e6b9ec2-c177-4a35-b933-fc83f3360640%2Fa947eff1-14e8-49a1-8078-231c86ca8ecb%2F8f9i5or_processed.jpeg&w=3840&q=75)
Transcribed Image Text:### Transcription for Educational Use:
**16**
a. What are the project costs of capital for new ventures with betas of 0.70 and 1.59? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
| Beta | Cost of Capital |
|------|-----------------|
| 0.7 | ____% |
| 1.59 | ____% |
b. Which of the capital investments shown above have positive (non-zero) NPVs? (You may select more than one answer. 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 S
- [ ] Project T
- [ ] Project R
**Instructions:**
For question (a), calculate the cost of capital for the given betas. Ensure your final answers are represented as percentages and are accurate to two decimal places.
For question (b), evaluate which of the projects have a positive Net Present Value (NPV) by selecting the corresponding checkboxes. Multiple selections are allowed.
![### Capital Investment Analysis
The Treasury bill rate is 5% and the market risk premium is 8%.
#### Project Data
| Project | Beta | Internal Rate of Return (%) |
|---------|------|-----------------------------|
| P | 0.95 | 14 |
| Q | 0.00 | 12 |
| R | 2.00 | 21 |
| S | 0.35 | 13 |
| T | 1.60 | 23 |
#### Questions
**a. What are the project costs of capital for new ventures with betas of 0.70 and 1.59?**
*(Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)*
| Beta | Cost of Capital (%) |
|------|---------------------|
| 0.70 | ? |
| 1.59 | ? |
**b. Which of the capital investments shown above have positive (non-zero) NPV's?**
*(You may select more than one answer. Click the box with the question mark to mark the correct answer.)*
- [ ] Project P](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6e6b9ec2-c177-4a35-b933-fc83f3360640%2Fa947eff1-14e8-49a1-8078-231c86ca8ecb%2F3sbqd3n_processed.jpeg&w=3840&q=75)
Transcribed Image Text:### Capital Investment Analysis
The Treasury bill rate is 5% and the market risk premium is 8%.
#### Project Data
| Project | Beta | Internal Rate of Return (%) |
|---------|------|-----------------------------|
| P | 0.95 | 14 |
| Q | 0.00 | 12 |
| R | 2.00 | 21 |
| S | 0.35 | 13 |
| T | 1.60 | 23 |
#### Questions
**a. What are the project costs of capital for new ventures with betas of 0.70 and 1.59?**
*(Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)*
| Beta | Cost of Capital (%) |
|------|---------------------|
| 0.70 | ? |
| 1.59 | ? |
**b. Which of the capital investments shown above have positive (non-zero) NPV's?**
*(You may select more than one answer. Click the box with the question mark to mark the correct answer.)*
- [ ] Project P
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