Conducting capital budgeting analysis of project

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1. A stock has an expected return of 13 percent, its beta is 1.4, and the expected return on the market is 10 percent. What must the risk-free rate be?

2. Which of the following is one of the steps necessary for conducting a capital budgeting analysis of a project?

Determining the systematic risk of the project

Deciding on how the capital required will be raised

Estimating the project’s future cash flows

Computing the debt-to-equity ratio of the firm

3. What is the payback period for a $20,000 project that is expected to return $6000 for the first two years and $3000 for years three through five?

3.67 years

4.50 years

4.67 years

4.76 years

Reference no: EM131914981

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