What is the appropriate required rate of return

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Reference no: EM131995362

Your company has a beta of 1.6 and you are considering an investment project with a beta of 2.1. Answer the following questions assuming that the short term Treasury bills are currently yielding 5 percent and that the return on the market is 15 percent.

a. What is the appropriate required rate of return for your company per the capital asset pricing model?

b. What is the appropriate required return for the investment project per the capital asset pricing model?

c. If your company invests 20% of its assets in the new investment project, what will be the beta of your firm after the project is adopted?

Reference no: EM131995362

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