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Suppose that Treasury bill rate is 4% and the market rate is 9%. a. Draw the security market line. b. Suppose that Project A has
Suppose that Treasury bill rate is 4% and the market rate is 9%. a. Draw the security market line. b. Suppose that Project A has the beta of 0.85, and Project B has the beta of 1.25. What are the project costs of capital for new ventures A and B ? c. If the internal rate of return is 10% for both, Project A and Project B, which project will you adopt? Why
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