As a Financial Analyst, You Are Tasked with Evaluating a Capital-Budgeting

question 33

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%, and the
Expected market rate of return is 11%. Your company has a beta of 1.4, 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) 13.8%.
• B) 7%.
• C) 15%.
• D) 4%.
• E) 1.4%.

---

Definitions:

Tablespoons

A unit of volume measurement, typically used in cooking, equivalent to three teaspoons or about 15 milliliters.

Teaspoon

A unit of measure used in cooking, equivalent to about 5 milliliters, or a small spoon used for stirring and sipping.

Medication

Substances used to treat, prevent, or diagnose illnesses, ranging from over-the-counter drugs to prescription pharmaceuticals.