2. Historically, Baker projects have had an average beta of 1.25 , which indicates the higher risk levels for the firm. Assuming the market risk premium (MRP) currently estimated to be 6% and the risk-free rate is 5.53%, what is the required return for an "average" Baker project using based on its average project beta? Show the average required retum to 2 decimal places ( xxx% ). (6 pts) Expected return for "average" company project (based on current estimated MRP) = R=Rf+(beta*(MarketreturnRf))R=5.53+(1.25(6.05.53)) A verage requined return =6.12% 1 3. The potential projects that Baker is comidering have the following expected eash flows. Each poject has rate and market risk promium, what is the required percentage return for esch of the projects? Show the next part of the assignment, these are the requiral rutes of rethirw for Problems 4-6), (8 pts). NOTE. When a firm has projects that differ in risk (beta) than the "ancrage" for the compary, then the firm's overall required refurn (trom Problem 2) isn'l applicuble Each project ricede to provide a refurn greater than \#3 ARE THE REQUIRED RETURNS FOR FACH FOR THE FOL WOWING: Use for Problems 4-7. For each project, calculate the NPV, IRR, profitability index (PI) and the pay back period. For each capital budgeting decision tool. indicate if the project should be accepted or rejected, assuming that each project is independent of the olhers. Importint Note: The venture capitat foths, when considering payback period, have a firm maximum payback period of four years. This 4 -year pay hack period has no impact on other capital budgeting analysis tecliniques, each is to be considered on its own. in other words, yes, all cash flows need to be considered for NPV, IRR, and PI. Expected cash flows for the four potential projects that Baker is considering as shown below (each project ends when its cash flows end): I have provided a suggested template for your final answers. Below the grid is where you should show all your required backup calculations (this means your cas, flom register inpals, the inlerest rate, Pl calkulation and where the equations in the cells will provide the required backup. Be sure to clearly indicate the required rate of retum for cach project (you calculated each in Problem 3). Remember that each capital budgeting method should be calculated and analyzed on a stand-alone basis. Points: 624242421677 If you need more room to show your work, just add space in this document or put at the end (but be sure your academic coach can easily find your work for each section). THERE ARE DISCUSSION QUESTIONS ON THE NEXTPAOE (IR PTS)