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A Project Has an Expected Risky Cash Flow of $500

Question 10

Multiple Choice

A project has an expected risky cash flow of $500, in year-2. The risk-free rate is 4%, the market rate of return is 14%, and the project's beta is 1.2. Calculate the certainty equivalent cash flow for year-2.


A) $622.04
B) $164.29
C) $401.90
D) None of the above

Correct Answer:

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