Question
d) Calculate the Net Present Value, Internal Rate of Return and Payback Period The financial controller is considering the use of the Capital Asset Pricing
d) Calculate the Net Present Value, Internal Rate of Return and Payback Period The financial controller is considering the use of the Capital Asset Pricing Model as a surrogate discount factor. The risk-free rate is 5 per cent. Year Stock Market Share Index Price 2008 2000 $15.00 2009 2400 $25.00 2010 2900 $33.00 2011 3500 $40.00 2012 4200 $45.00 2013 5000 $55.00 2014 5900 $62.00 2015 6000 $68.00 2016 6100 $74.00 2017 6200 $80.00 2018 6300 $83.33 e) Calculate the CAPM f) Explain why this figure may differ from that calculated above (i.e. Cost of equity Ordinary Shares)
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