Project opportunity cost of capital

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Reference no: EM132007595

1. Assume that both portfolios A and B are well diversified, that E(rA) = 16%, and E(rB) = 14%. If the economy has only one factor, and ?A = 1.0, whereas ?B = 0.8, what must be the risk-free rate? (Do not round intermediate calculations. Omit the "%" sign in your response.) Risk-free rate %

A project's opportunity cost of capital is:

A. equal to the average return on all company projects

B. the return that shareholders could expect to earn by investing in the financial markets

C. the return earned by investing in the project

D. designed to be less than the projects IRR

2. A project's opportunity cost of capital is:

A. equal to the average return on all company projects

B. the return that shareholders could expect to earn by investing in the financial markets

C. the return earned by investing in the project

D. designed to be less than the projects IRR

Reference no: EM132007595

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