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PT WIRAGUNA has one proposed project, namely Project A. The finance department has estimated the return on the project in several economic conditions as follows:
PT WIRAGUNA has one proposed project, namely Project A. The finance department has estimated the return on the project in several economic conditions as follows:
The State of the Economy | Probability | Market Return | Project Return A. |
Brilliant Good Moderate Bad | 0,25 0,20 0,30 0,25 | 35% 20% 13% -8% | 40% 36% 24% 10% |
The risk-free interest rate is estimated at 9%
Based on the above data, calculate: a. Covariance project with market. b. Beta project. c. Required return for the project according to the CAPM. d. Do you have to accept the project, give your reasons.
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