Table 12.3 Tangshan Mining Company Is Considering Investment in One of Two

question 10

Multiple Choice

Table 12.3
Tangshan Mining Company is considering investment in one of two mutually exclusive projects M and N which are described below. Tangshan Mining's overall cost of capital is 15 percent, the market return is 15 percent and the risk-free rate is 5 percent. Tangshan estimates that the beta for project M is 1.20 and the beta for project N is 1.40.
-Using the risk-adjusted discount rate method of project evaluation, the NPV for project N is ________. (See Table 12.3)

• A) $166,132.
• B) $122,970.
• C) $85,732.
• D) none of the above.

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