Risk Free Rate Beta of company's stock Risk Premium on average stock 3.3% 1.9 5.2% Cash Flows -105 0 16 16 13 12 14 11 15 14 13 12 11 Hint: you will need to apply the CAPM to estimate the firm's cost of equity capital. Please compare the IRR to the cost of capital: IRR Cost of Capital (Required Return) Difference (IRR - Cost of Capital) 43 1. What is the difference in IRR and cost of capital? A Between-10.0% and -4.0% B Between -4.0% and 0.0% C Between 0.0% and 4.0% D Between 4.0% and 10.0% 2. Should the firm accept the project? A Yes No