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 11.6%, and they observe that the current risk-free rate of return is 6.6%. 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 (CFO) Year(t) Project X Project Y $68,000 $76,000 Cash inflows (CFt) $27,000 $23,000 27,000 33,000 27,000 35,000 27,000 51,000 AWN. 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 1.22 and project Y has an RADR factor of 1.42. The RADR factors are similar to project betas. (Hint: Use the following equation to calculate the required project return for each: r=RE + bx m -RE)