29. Procter & Gamble's stock has a beta of 1.40, the risk.free rate is 4.25%, and the market risk premium is 5.50%. Using the capital asset pricing model, what is the firm's required rate of return? a 11.36% b. 11.6596 C11.95% d. 12.25% e. 12.55% 30. You and a group of investors are planning to make a significant real estate investment in an office park with multiple buildings and tenants. As a 'hurdle rate of return the group is seeking to earn a 15% after-tax return on leveraged capital. After a considerable due diligence investigation, which includes an in-depth but conservative review of all financial, legal, local market supply and demand conditions and other factors, you have determined that the investment has a Net Present Value of negative $4.205. How should you advise your group of investors? a. Proceed with the investment --hopefully the situation will improve by itself. b. Suggest that either the group finds easy ways to improve returns on the project through rent increases, cost cuts or other means or terminates the planned investment Back out of the deal entirely: Despite considerable time spent on conducting a through due diligence, this deal doesn't have any hope of succeeding d. Both (a) and (c) have validity. e Neither (a) or (b) have validity. PART IV: Complete the following problems. Show all work for full credit. 1. Ammy Fallon holds the following portfolio: Stock Investment A $150,000 56,250 93,750 D 75.000 Total $375.000 Beta 1.40 0.60 1.20 0.80 a. Calculate the portfolio's beta? [3 points) b. Can we consider 'beta' to be a measure of risk - or is it something else? Describe your response [2 points)