Examining capm and cost of capital


Draw the security market line when the Treasury bill rate is 4% and the market risk premium is 7%.

a).- What are the project costs of capital for new ventures with betas of .75 and 1.75?

b).- Wich of the following capital investments have positive NPVs? (L03)

Project Beta Internal Rate of Return, %

P 1.0 14

Q 0 6

R 2.0 18

S 0.4 7

T 1.6 20

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Finance Basics: Examining capm and cost of capital
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