TThe net cash inflow from this project is estimated at 30m per year. The internal rate of return of the solar panel project is 12%. The company consultant has estimated the portfolio beta as 1.29.

Projects details :

Project R: ?

project S: investment 240,000. Beta coefficient 1.2

project T: investment 380,500. Beta coefficient 0.8

project U: investment 460,000. Beta coefficient 1.5

project V: investment 550,000. Beta coefficient 1.6

a. Calculate R?

b. Calculate required return for each project using capital asset pricing model

cc. Diversification can elimate all risk. Disscuss