Southern Imports is an all-equity firm with a beta of 1.23. The firm is considering a new project that entails less risk than its current operations and thus management feels that the firm's beta should be lowered by .18 when assigning a discount rate to this project. The expected return on the market portfolio is 9.4 percent and the risk-free rate is 2.8 percent. What discount rate should be assigned to this project? 9.73% 9.34% 10.32% 11.46%

Southern Imports is an all-equity firm with a beta of 1.23. The firm is considering a new project that entails less risk than its current operations and thus management feels that the firm's beta should be lowered by .18 when assigning a discount rate to this project. The expected return on the market portfolio is 9.4 percent and the risk-free rate is 2.8 percent. What discount rate should be assigned to this project? 9.73% 9.34% 10.32% 11.46%

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter11: Capital Budgeting And Risk

Section: Chapter Questions

Problem 6P

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