BONUS QUESTION

ABC Appliance Company uses the CAPM to determine its risk$-$adjusted discount rate, $($RADR$),$ for each of its projects:

$Rj=RF+[b^{**}(rm-RF)]$

The company is currently interested in investing in the capital project shown below. The return on market is $7\mathrm{.}55\%,$ the risk$-$free

rate is currently $6\mathrm{.}65\%$ and the project has a beta of $1\mathrm{.}5.$