ommend that Risk-adjusted discount rates: Tabular After a careful evaluation of investment alterna: tives and opportunities, Masters School Supplies has developed a CAPM-type relation- ship linking a risk index to the required return (RADR), as shown in the following table. Risk index 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 Required return (RADR) 7.0% (risk-free rate, Rp) 8.0 9.0 10.0 11.0 12.0 13.0 14.0 15.0 16.0 1.6 1.8 2.0 17.0 The firm is considering two mutually exclusive projects, A and B. Following are the data that the firm has been able to gather about the projects. Project A -$20,000 5 years Initial investment (CF) Project life Annual cash inflow (CF) Risk index Project B -$30,000 5 years $10,000 1.4 $7,000 0.2 All the firm's cash inflows have already been adjusted for taxes. a. Evaluate the projects using risk-adjusted discount rates. b. Discuss your findings in part a, and recommend the preferred project