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Supersun Inc's (S818) asset beta is 1.40. The risk-frew rate (f.e., the retum on a US Troasury security) is 1.0% and the expected reburn on

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Supersun Inc's (S818) asset beta is 1.40. The risk-frew rate (f.e., the retum on a US Troasury security) is 1.0% and the expected reburn on the market (i.e., on the 38.500 index) is 6.0%. Based on the Capital Asset Pricing Model, the appropriate requifed return on 8Sl5 assots ( Le., the erpspriso) is [Round your answor to one decimal (e.g,21.0%6). [Review/side learning: Recal the balance-shoet view of the entererise it as shaped libe an inverted h. The enterprise consists of a firmis current assets (the top-leti part of the balance sheet), the firm's current liabilies che topright part of the balance sheet). and the firm's long.term assets (the beltom-left parf of the balance sheet). It does not include the middle-fight piece of the balance sheet (Le. the long-tems liebilies), nar does it include the bottom-tight pince (c.e., owners" equity). I $81 is evaluating a new project, to make sclar-powered airplanes. The preject requres an intial cuaflay of 51,050.000 and offers anselpshed future cash flows of $240,000 at the ends of yoars 1-6. 1. Using the frm-level required return as the required retarn in calculasing the aiptand projects NAW, what will be the projocts NPY? Answer; 3 [Rocund your answer to the nearest dollar. For a negafive number, just put a minus in front. of your antry.] Using the NPV decision rule, should SSI accept or rejoct the project? Answar: reject.] IEnser jait to word: accept or II. Further analysis indicates that the airplanes projoct thas a beta of 2.60. In other aonds, this new potencal project is risklerisader [plek one] than the overall SSI enterpriso that currently exists. Answeri Use this project-speckic bets and tho CAPM to detertine the project-spocfic requied rotum. Ansarer: your ansave to one decimal (0.9,30%). In tum, ise this requined return bo calculating the airplanes projocts NPV Answer: $ nearest dollar. For a negabve number, just put a minus in front of your ertory]

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