Table 11.9 Tangshan Mining Company Is Considering Investment in One of Two

question 79

Multiple Choice

Table 11.9
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.
-Which project, M or N, would be preferable if both projects were of average risk as the overall firm and Tangshan Mining has a beta of 1.0? (See Table 11.9)

• A) Project M
• B) Project N
• C) They are equivalent.
• D) None of the above.

---

Definitions:

Search Terms

Words or phrases entered into a search engine or database query to find specific information.

Wolfram Alpha

A computational knowledge engine that provides answers to factual queries directly by computing the answer from externally sourced data.

Factual Questions

Questions that can be answered with specific pieces of information, often verifiable and based on facts.

Public Domain

Works that are not protected by copyright law and are freely available for use by the public without restrictions.