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 its 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 6.8% 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.) Initial investment (CF) Year (t) Project X Project Y $70,000 $82,000 Cash inflows (CF) $28,000 $18,000 28,000 28,000 28,000 33,000 28,000 42,000 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 1.35. The RADR factors are similar to project betas. (Hint: Use the following equation to calculate the required project return for each: r=Rp+bx (rm-RF).) b. Discuss your findings in part (a), and recommend the preferred project