(WACC and investment decision) The project whose cash flows are given below has = 1.6. If...

(WACC and investment decision) The project whose cash flows are given below has β = 1.6. If the market return E r( ) M = 10% and the risk-free rate rf

= 3%, should the firm undertake the project?

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1 A B C D E EVALUATION OF A RISKY PROJECT 2 Year 0 1 2 3 3 Expected cash flow -100 60 50 40 4 5 B 6 E(M) 7 f 1.6 10% 3%