Explore BrainMass

Explore BrainMass

    Rate of return

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    The ABC Co. has no debt in its capital structure, a beta of 0.8, and raises all funds through sale of common stock. The current market rate for similar stock is 14% and the risk-free rate is 6%. The firm is considering a project with a return of 12.9%. Should it accept the project, and if so why (Show all work).

    © BrainMass Inc. brainmass.com June 3, 2020, 6:37 pm ad1c9bdddf
    https://brainmass.com/business/business-math/rate-return-capital-structure-67958

    Solution Summary

    This shows how to determine whether or not a firm should accept a project with a given rate of return.

    $2.19

    ADVERTISEMENT