What is the required return for an average avalon project

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Question 1: Historically, Avalon projects have had an average beta of 1.4. Assuming the market risk premium (MRP) currently estimated to be 9.5% and the risk free rate is 1.10%, what is the required return for an "average" Avalon project using based on its average project beta?

Expected return for "average" company project (based on current estimated MRP) =

Question 2: The potential projects that Avalon is considering have the following expected cash flows. Each project has its own unique risk and as such, the beta on each project is given. Using the data from #2 for the risk free rate and market risk premium, what is the required percentage return for each of the projects?

                      PROJECT A              Project B            Project C            Project D

Beta                  1.6                        1.2                  1.5                 1.7

Reference no: EM132538674

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