A Project Has an Internal Rate of Return of 11

question 32

Multiple Choice

A project has an internal rate of return of 11.76 percent.The company beta is 1.22,and the pure play beta is 1.14.The market rate of return is 11.8 percent,the tax rate is 35 percent,and the risk-free rate is 3.3 percent.Should this project be accepted according to the CAPM if the firm is all-equity financed? Why or why not?

• A)No,the CAPM rate is 13.36 percent.
• B)Yes,the CAPM rate is 12.99 percent.
• C)No,the CAPM rate is 11.96 percent.
• D)No,the CAPM rate is 12.99 percent.
• E)Yes,the CAPM rate is 13.36 percent.

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Definitions:

Highly Educated Workers

Individuals who have attained a high level of education, often holding college degrees or higher, which usually results in specialized skills.

Less-Educated Workers

Workers with lower levels of formal education, often facing different employment opportunities and wage scales compared to more educated workers.

Minimum Wage

The lowest hourly, daily, or monthly remuneration that employers may legally pay to workers.

Average Productivity

The total output of a production process divided by the number of units of input, measuring efficiency in using inputs to produce outputs.