Score: 0 of 2 pts 17 of 25 (10 complete) HW Score: 36.33%, 18.16 of 50 p P11-27 (similar to) Question Help 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 return is 6.9%. Cash flows associated with the two projects are shown in the following table. (Click on the icon here e in order to copy the contents of the data table below into a spreadsheet.) Initial investment (CF) Year (t) 1 Project X Project Y $72,000 $77,000 Cash inflows (CF) $33,000 $19,000 33,000 34,000 33,000 36,000 33,000 47,000 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 1.15 and project Y has an RADR factor of 1.41. The RADR factors are similar 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 %. (Round to two decimal places.)