As a Financial Analyst,you Are Tasked with Evaluating a Capital

question 12

Multiple Choice

As a financial analyst,you are tasked with evaluating a capital budgeting project.You were instructed to use the IRR method and you need to determine an appropriate hurdle rate.The risk-free rate is 4 percent and the expected market rate of return is 11 percent.Your company has a beta of 0.75 and the project that you are evaluating is considered to have risk equal to the average project that the company has accepted in the past.According to CAPM,the appropriate hurdle rate would be ______%.

• A)4
• B)9.25
• C)15
• D)11
• E)0.75

---

Definitions:

Funded Studies

Research projects that receive financial support from government agencies, organizations, or private entities to conduct their investigations.

Unfunded Studies

Research projects that do not receive financial support from external sources such as governments, institutions, or private donors.

Norman Triplett

A psychologist known for conducting one of the earliest experiments in social psychology about the effects of competition on performance.

Racing Cyclists

Athletes who specialize in competitive cycling, often participating in races that test speed, endurance, and strategic skill on various terrains.