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 11.8%, and they observe that the current risk-free rate of retum 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.) Project x Project Y $75,000 $85,000 Cash inflows (CF) $33,000 $28.000 33,000 35,000 33,000 38,000 33,000 51,000 Initial investment (CF) Year (0) 2 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 1.24 and project has an RADR factor of 1.38. The RADR factors are similar to project betas. (Hint: Use the following equation to calculate the required project retum for each: r=Rx+bx ('m-R-)) b. Discuss your findings in part (a), and recommend the preferred project a. The risk-adjusted discount rate for project X will be %. (Round to two decimal places.)