CFIN (with Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
5th Edition
ISBN: 9781305661653
Author: Scott Besley, Eugene Brigham
Publisher: Cengage Learning
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Chapter 10, Problem 15PROB
Summary Introduction
CAPM:
Calculate the cost of capital as follows:
Net present value is the difference between the present values of
Calculate the net present value as follows:
Decision rule:
QQ is adding another division that requires initial outlay of $29,500 and generate cash inflows of $6,250. The given the market rate is 11%, risk free rate is 4% and beta is 0.8.
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