Using the Capital Asset Pricing Model (CAPM), Sun State Determined

Multiple Choice

Using the capital asset pricing model (CAPM) , Sun State determined that the required rate of return for a capital budgeting project it is evaluating is equal to 18 percent. If U.S. Treasury bonds yield 7 percent and the market risk premium is 5 percent, what is the project's beta coefficient?

A) 5.50
B) 2.20
C) 5.00
D) 12.50
E) 0.45