Hi there ....having trouble with this one because confuse I initially used the borrowing rate the expected return = risk-free + (beta*6%) .

i.e (7%-6%) / 6% = beta

i.e (beta B) = 1.8* beta

Polycorp is investigating two projects. The risk free rate is .06 and the market premium is 0.06. Project A has a beta of.75 and Project B has a beta 1.8 times that of the average for the firm's existing projects. Projects A and B are independent. If accepted the projects will initially be funded by borrowing at 7%pa. Calculate the beta of project B to two decimal places. The firm's current weighted average cost of capital is 11% pa (before taking either or both A and B). Assume no taxes