Jeb's Automotive has a beta of 1.0 and a cost of equity of 14 %. The risk-free rate of return is 5 %. Jeb's is considering a project with a beta of.75. An appropriate discount rate for the project is:

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The appropriate discount rate can be calculated using the Capital Asset Pricing Model (CAPM): Discount Rate = Risk-free rate + Beta * (Market return - Risk-free rate). Assuming the market return is implied by Jeb's cost of equity, 14%, the calculation is: 5% + 0.75 * (14% - 5%) = 11.75%.

Jeb's Automotive Has a Beta of 1