What is the component cost of capital for the company? Calculate using the
CAPM.
What is the company’s WACC?
What are the expected cash flows for the investments?
What is the standard deviation for each investment?
What is the coefficient of variation for each investment?
Given the data above, which investment has the higher risk?
What is the expected net present value (NPV) for each investment?
What is the internal rate of return (IRR) of the investments?
According to the decision rules for the NPV and those for the IRR, is there an
acceptable project? Explain your answer.
Is there a conflict between the two decision methods? If so, what would you use to
recommend a project?