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Discuss what is the appropriate discount rate and why

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Reference no: EM132626115

Facing a problem understanding the following question. Would be great full if you can help its just a tutorial question:

  1. The current risk free rate is 4% and the expected risk premium on the market portfolio is 7%.
  2. You work for a software company and have been asked to estimate the appropriate discount rate for a proposed investment project.
  3. Your company's stock has a beta of 1.3.
  4. The project is a proposal to begin cigarette production.
  5. RJR Reynolds has a beta of 0.22.

Problem 1: What is the appropriate discount rate and why? (here is the questions, is it Solvable?)

Reference no: EM132626115

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