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 7.3%. 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 $69,000 $83,000 Cash inflows (CF) $32,000 $17,000 32,000 30,000 32,000 35,000 32,000 50,000 1 2 3 4 1.25 and project Y has an RADR factor of 1.42. The RADR fact are similar 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 to project betas. (Hint: Use the following equation to calculate the required project return for each: r= =Rp+bx ('m-RF). b. Discuss your findings in part (a), and recommend the preferred project. a. The risk-adjusted discount rate for project X will be 1%. (Round to two decimal places.)