The Treasury bill rate is 2% and the market risk premium is 7%. Internal Rate of Project Beta Return, % 0.90 10 0.00 8 3.00 23 0.30 2.60 25 a. What are the project costs of capital for new ventures with betas of 0.65 and 1.65? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Beta Cost of Capital 0.65 1.65 % LORST
The Treasury bill rate is 2% and the market risk premium is 7%. Internal Rate of Project Beta Return, % 0.90 10 0.00 8 3.00 23 0.30 2.60 25 a. What are the project costs of capital for new ventures with betas of 0.65 and 1.65? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Beta Cost of Capital 0.65 1.65 % LORST
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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Question
![The Treasury bill rate is 2% and the market risk premium is 7%.
Internal
Rate of
Project
Beta
Return, %
P
0.90
10
0.00
8
R
3.00
23
0.30
2.60
25
a. What are the project costs of capital for new ventures with betas of 0.65 and 1.65? (Do not round intermediate calculations. Enter
your answers as a percent rounded to 2 decimal places.)
Beta
Cost of Capital
0.65
%
1.65
%
b. Which of the capital investments shown above have positive (non-zero) NPV's? (You may select more than one answer. Single 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.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0d715aab-3b66-4786-8891-5c8965b43e2e%2F01a11dfd-e2ad-4271-8e93-18b120c54579%2Fu6l9rrg_processed.png&w=3840&q=75)
Transcribed Image Text:The Treasury bill rate is 2% and the market risk premium is 7%.
Internal
Rate of
Project
Beta
Return, %
P
0.90
10
0.00
8
R
3.00
23
0.30
2.60
25
a. What are the project costs of capital for new ventures with betas of 0.65 and 1.65? (Do not round intermediate calculations. Enter
your answers as a percent rounded to 2 decimal places.)
Beta
Cost of Capital
0.65
%
1.65
%
b. Which of the capital investments shown above have positive (non-zero) NPV's? (You may select more than one answer. Single 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.)
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