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Comhampton Co is an all-equity company with a beta of 0.8. It is appraising a one-year project which requires an outlay now of K1,000
Comhampton Co is an all-equity company with a beta of 0.8. It is appraising a one-year project which requires an outlay now of K1,000 and will generate cash in one year with an expected value K1,250. The project has a beta of 1.3, rf=10%, rm = 18% Required: a) Discuss the concept of CAPM in relation to risk and investment management (25 marks) b) Using the in the case above, calculate the firm's current cost of equity capital (5 marks) Total 30 marks
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Intermediate Accounting
Authors: Donald Kieso, Jerry Weygandt, Terry Warfield, Nicola Young,
10th Canadian Edition, Volume 1
978-1118735329, 9781118726327, 1118735323, 1118726324, 978-0176509736
