07-26-2005, 07:26 AM
Hi,
I am supposed to repeat a Financing Management Module and I am a bit stuck with the following question, I am not too sure how to deal with the Beta Factor? Any help is greatly appreciated.
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An investment in a project produces cash inflows of £ 750, £ 750, £ 900, £ 900 and £ 595 at 12 month intervals. The asset created by the project is to be depreciated at £ 500 per annum straightline.
The current yield on Treasury Bond is 4% and the estimated annual return on the capital market is 10%.
The company has a beta factor of 1.33.
You are required to decide whether the project is worthwhile using
a) The Net Present Value
b) The Internal Rate of Return
I am supposed to repeat a Financing Management Module and I am a bit stuck with the following question, I am not too sure how to deal with the Beta Factor? Any help is greatly appreciated.
-------------------------------------------------------------------
An investment in a project produces cash inflows of £ 750, £ 750, £ 900, £ 900 and £ 595 at 12 month intervals. The asset created by the project is to be depreciated at £ 500 per annum straightline.
The current yield on Treasury Bond is 4% and the estimated annual return on the capital market is 10%.
The company has a beta factor of 1.33.
You are required to decide whether the project is worthwhile using
a) The Net Present Value
b) The Internal Rate of Return
