The CFO of MediSearch plc believes that investing into a project which will develop a new drug for fighting the flu virus, promises a long-term annual return of 13%. The expected return of the market index isRM=11%, the volatility of the market index isM= 10.8%, and the risk-free asset earnsRf= 1.4%. The CFO has studied similar projects of other companies and believes that the covariance between the returns of this project and the returns of the market isP,M= 0.0097 (in decimal form).

1) What is the beta of the project?(Enter your answer rounded to two decimal places.)

2) According to the CAPM, what should be the required return of the project given its beta in the answer of first question? (two decimal places)

3) Should the CFO accept the project?