Paragrato TOTO TO calculate IRR OF THE PROJECT INITIAL investment = cash flow/(1+r)^5 100= 161.05/100 = 1.6105 (1+r) = 1.10 R=0.10 R 10% 2) 2. For a loan with a given (fixed) APR, what happens to the EAR as the frequency of the payments increases (e.g., from quarterly to monthly)? a The EAR increases b) b) The EAR does not change c) c) The EAR decreases. d) Cannot tell from the information given. For problems, 3-5 assume that the expected return on the market portfolio isy 10%, the standard deviation of the return on the market portfolio is 20%, and the risk-free rate is 5% (all on an annual basis). 3) 3. Assuming the CAPM holds, what is the expected return on an asset with a beta of 1.5? a) 12.5% b) 15.0 %