A Project Has an Expected Risky Cash Flow of $200

question 61

Multiple Choice

A project has an expected risky cash flow of $200 in year 1. The risk-free rate is 6 percent, the expected market rate of return is 16 percent, and the project's beta is 1.50. Calculate the certainty equivalent cash flow for year 1, CEQ₁.

• A)$175.21
• B)$165.29
• C)$228.30
• D)$182.76

---

Definitions:

Monocular

Relating to or involving only one eye.

Perceptions

The process of organizing and interpreting sensory information, enabling us to recognize meaningful objects and events.

Sensations

The initial information gathering and processing phase, involving the detection of stimuli by the sensory organs and their translation into neural signals.

Ames Room

A distorted room that creates an optical illusion, making objects appear larger or smaller than they truly are.