A project under consideration has an internal rate of return of 14% and a beta of .6.

Question:

A project under consideration has an internal rate of return of 14% and a beta of .6. The risk-free rate is 4%, and the expected rate of return on the market portfolio is 14%.

a. What is the required rate of return on the project? Should it be accepted?

b. What is the required rate of return on the project if its beta is 1.6? Should the project be accepted in this case?

c. Why does your answer change?

Internal Rate of Return
Internal Rate of Return of IRR is a capital budgeting tool that is used to assess the viability of an investment opportunity. IRR is the true rate of return that a project is capable of generating. It is a metric that tells you about the investment... Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...