What discount rate should firm 1 use for project

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Suppose Firm 1 has available a project that yields a fixed 10% return each year (i.e. the return is guaranteed). Use the same assumptions from Question 3 regarding the risk-free rate, stock market return premium, and the CAPM beta for Firm 1. Also, continue to assume Firm 1 is 100% equity financed.

What discount rate should Firm 1 use for this project? Report your answer in percentage points rounded to the nearest tenth of a percentage point (e.g., 9.5). Also, when writing your answer, just write the number and do NOT add a "%" behind it (e.g., just write 9.5 and NOT 9.5%).

Reference no: EM133111970

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