PLEASE DO PARTS A AND B.

P12-12 (similar to) Question Help Risk-adjusted rates of return using CAPM Centennial Catering, Inc., is considering two mutually exclusive investments. The company wishes to use a CAPM-type risk-adjusted discount rate (RADR) in ils analysis. Centennial's managers believe that the appropriate market rate of return is 12.1%, and they observe that the current risk-free rate of return is 7.5%. Cash flows associated with the two projects are shown in the following table. (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Project X Project Y Initial Investment (CF) $66,000 $77,000 Year() Cash inflows (CF) $29.000 $26,000 2 29,000 34,000 29,000 41.000 29.000 41,000 1 3 a. Use a risk-adiusted discount rale approach to calculate the nel present value of each proiect, given that proiect X has an RADR factor of 1.18 and proiect Y has an RADR factor of 1.36. The RADR factors are similar to project belas a. The risk-adjusted discount rate for project X will be %. (Round to two decimal places.) P12-12 (similar to) Question Help LUITICI VI IC uala Lavic WCIVV III VIUEI w Lupy ilo LVIILENILO IH ILU a picausnice) Initial investment (CF) Year (t) 1 Project X Project Y $66,000 $77,000 Cash inflows (CFt) $29,000 $26,000 29,000 34,000 29,000 41,000 29,000 41,000 2 3 4 a. Use a risk-adjusted discount rate approach to calculate the net present value of each project, given that project X has an RADR factor of 1.16 and project Y has an RADR factor of 1.36. The RADR factors are similar to project betas. (Hint: Use the following equation to calculate the required project return for each: r= Rp+bx ('m-RF).) b. Discuss your findings in part (a), and recommend the preferred project. a. The risk-adjusted discount rate for project X will be %. (Round to two decimal places.)