Question: Consider a project that requires an initial investment of 400 today and offers equal future cash flows of 150 annually over the next 10 years. The projects beta is 1.8.

a) Assuming that risk-free rate is 8% and the market portfolios return is 16%, what is the net present value of this project?

b) What is the highest possible beta for the project before its NPV becomes negative if its internal rate of return is 35.73%?