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Intermart Ltd (a super market business) is considering opening up a restaurant in Beau Vallon. Intermart Ltd is all equity financed. The beta equity of
Intermart Ltd (a super market business) is considering opening up a restaurant in Beau Vallon. Intermart Ltd is all equity financed. The beta equity of Intermart Ltd is 0.8 and the beta equity of the restaurant project is 1.5. The internal rate of return for the project is 15% per annum. The return on a treasury bill is 3% per annum and the return on the market is 8% per annum. Required: Should the restaurant project be undertaken? Show all
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