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PLease help . You have been hired by J I D Chili Restaurants to consult on a proposed expansion into a new city. You come

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PLease help

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. You have been hired by J I D Chili Restaurants to consult on a proposed expansion into a new city. You come to the conclusion that the expansion will require an initial capital outlay of $500,000, but will provide an expected prot of $100,000 per year every year for the forseeable future. The standard deviation of the yearly returns is estimated at 50%. The annual treasury bill rate is 4%, the expected return to the market is 12%, and the standard deviation of the market return is 25%. You believe there is a correlation coefcient of 0.8 between yearly returns to the expansion project and the market return. (a) (4 points) What is the covariance between returns to the expansion project and the market return? (b) (4 points) What is the {3' of the expansion project? (c) (4 points) What is the expected excess return to the expansion project? (d) (4 points) If CAPM holds, should you invest in this project? ) (e (4 points) What would [3 need to be for you to be indifferent between accepting and rejecting this pro ject

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