Risk-adjusted rates of return using CAPMCentennial 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

11.7%,

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.)

	Project X	Project Y
Initial investment (CF0)	$70,000	$78,000
Year (t )	Cash inflows (CFt)
1	$31,000	$17,000
2	31,000	33,000
3	31,000	39,000
4	31,000	49,000

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

1.37.

The RADR factors are similar to project betas.

(Hint:

Use the following equation to calculate the required project return for each:

r=RF+brmRF.)

b. Discuss your findings in part

(a),

and recommend the preferred project.

a. The risk-adjusted discount rate for project X will be

nothing%.

(Round to two decimal places.)

PLEASE ANSWER ALL, A & B.