Question
Table 12.2 A firm is considering investment in a capital project which is described below. The firm's cost of capital is 18 percent and the
Table 12.2
A firm is considering investment in a capital project which is described below. The firm's cost of capital is 18 percent and the
riskfree
rate is 6 percent. The project has a risk index of 1.5. The firm uses the following equation to determine the risk adjusted discount rate, RADR, for each project: RADR = Rf + Risk Index (Cost of capital
Rf)
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The net present value of the project when adjusting for risk is ________. (See Table 12.2)
Question content area bottom
Part 1
A.
$105,000
B.
$87,000
C.
$0
D.
$9,300
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