Problem:
Bell Manufacturing is considering investment in one of two mutually exclusive projects X and Y which are described below. Bell Manufacturing's overall cost of capital is 15 percent, the market return is 14 percent and the risk-free rate is 3 percent. Bell estimates that the beta for project X is 1.40 and the beta for project Y is 1.80.
Required:
Question: Calculate the risk-adjusted discount rates for project X and project Y using CAPM?
Note: Please provide full description.