Table 12.3
Tangshan Mining Company is considering investment in one of two mutually exclusive projects M and N which are described below. Tangshan Mining's overall cost of capital is 15 percent, the market return is 15 percent and the risk-free rate is 5 percent. Tangshan estimates that the beta for project M is 1.20 and the beta for project N is 1.40.
-Using the risk-adjusted discount rate method of project evaluation, the NPV for Project N is ________. (See Table 12.3)
A) $166,132
B) $122,970
C) $85,732
D) $600,000

Question

Table 12.3
Tangshan Mining Company is considering investment in one of two mutually exclusive projects M and N which are described below. Tangshan Mining's overall cost of capital is 15 percent, the market return is 15 percent and the risk-free rate is 5 percent. Tangshan estimates that the beta for project M is 1.20 and the beta for project N is 1.40. 
-Using the risk-adjusted discount rate method of project evaluation, the NPV for Project N is ________. (See Table 12.3)
A) $166,132 
B) $122,970 
C) $85,732 
D) $600,000

Quizplus · Accepted Answer

The Answer of Table 12.3
Tangshan Mining Company is considering investment in one of two mutually exclusive projects M and N which are described below. Tangshan Mining's overall cost of capital is 15 percent, the market return is 15 percent and the risk-free rate is 5 percent. Tangshan estimates that the beta for project M is 1.20 and the beta for project N is 1.40. 
-Using the risk-adjusted discount rate method of project evaluation, the NPV for Project N is ________. (See Table 12.3)
A) $166,132 
B) $122,970 
C) $85,732 
D) $600,000

Table 12.3 Tangshan Mining Company Is Considering Investment in One of Two