1. Using the CAPM. A stock has an expected return of 14%, and its beta is 1.85. The expected return on the market is 12%. What must be the risk free rate?
9.65%
10.55%
15.79%
22.26%
2. What is the net present value of a project with the following cash flows if the required rate of return is 8 percent? Time Cash Flow (in $) 0 -3,500 1 1000 2 3,200 3 4,300
$455.97
$3,582.89
$5,648.22
$7,451.22