You are considering investing in Boeing and/or Walmart shares.

You have a 5-year investment time horizon, meaning you expect to hold each investment for 5 years.

Your research has identified the following:

• Equity Risk Premium: 4.25%
• US Treasury Rates: 1 year 5.21%, 3 year 4.31%, 5 year 4.14%, 10 year 4.21%

Boeing:

• Currently trading at $233.43 per share
• 5-year analyst consensus is projecting $412.50 per share
• 5-year Beta: 1.53

Walmart

• Currently trading at $153.89 per share
• 5-year analyst consensus is projecting $196.40 per share
• 5-year Beta: 0.49

You will be using the Capital Asset Pricing Model to make your investment decision and you are capital-gain oriented.

QUESTIONS:

1. Which risk free rate would you use and why?
2. Would you invest in Boeing and/or Walmart (show all calculations)?