Question: 1. A firm is considering a capital investment. The risk premium is 0.04, and it is considered to be constant through time. Riskless investments may now be purchased to yield 0.06 (6%). If the project's beta (β) is 1.5, what is the expected return for this investment?
2. Explain the various degrees of dependency among two or more projects. If one or more projects seem desirable and are complementary to a given project, should those complementary projects be included in a proposal package or kept separate for review by management?