Cost of capital and beta, Company "A" has a beta of 1.5 and

Cost of capital and beta

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Reference no: EM13723992

Company "A" has a beta of 1.5 and a cost of capital of 25%. Company "B" has a beta of 0.8 and a cost of capital of 15%.

When evaluated at a rate of 15%, the project shows an NPV of +$5 million, and when evaluated at a rate of 25%, the project shows an NPV of -$2 million.

Should either company accept the project and if so under what conditions?

Reference no: EM13723992

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Cost of capital and beta : Company "A" has a beta of 1.5 and a cost of capital of 25%. Company "B" has a beta of 0.8 and a cost of capital of 15%. When evaluated at a rate of 15%, the project shows an NPV of +$5 million, and when evaluated at a rate of 25%, the project shows a..

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