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extrl83 extrl83
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4 months ago
Thunder Bay Entertainment Inc. has two separate divisions: DVD rental and sporting goods. The beta of the entire company is 1.25. The beta of the DVD rentals division is 0.8 and the beta of the sporting goods division is 1.5. The risk-free rate is 4% and the market risk premium is 7.5%. Which of the following independent projects should the company undertake?

ProjectIndustryCF0Perpetual annual CF
ISporting goods$150,000$25,000
IISporting goods$200,000$30,000
IIIDVD rental$50,000$6,000
IVDVD rental$80,000$7,500


▸ Projects I and II

▸ Projects III and IV

▸ Projects II and IV

▸ Projects I and III
Textbook 
Corporate Finance

Corporate Finance


Edition: 5th
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wackocrazywackocrazy
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