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Question 936  CAPM, WACC, IRR

You work for XYZ company and you’ve been asked to evaluate a new project which has double the systematic risk of the company’s other projects.

You use the Capital Asset Pricing Model (CAPM) formula and input the treasury yield (rf), market risk premium (rmrf) and the company’s asset beta risk factor (βXYZ) into the CAPM formula which outputs a return.

This return that you’ve just found is: