Calculate the certainty equivalents cash flow for years

Reference no: EM133284476

Question - A project has an expected risky cash flow of $500 in years 1, 2 and 3. The risk-free rate is 4 percent, the expected market rate of return is 14 percent, and the project's beta is 1.20.

(A) Calculate the certainty equivalents cash flow for years 1, 2 and 3 (CEQ).

(B) What is the difference between the CEQs and the PVs of the year 1, 2, 3 risky cash flows?

Reference no: EM133284476

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