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**Unformatted text preview: **(0.12 0.04)] = 0.104 = 10.4% The opportunity cost of capital is 10.4% and the investment is expected to earn 9.8%. Therefore, the investment has a negative NPV. e. Again, we use the security market line: r = r f + (r m r f ) 0.112 = 0.04 + (0.12 0.04) = 0.9 5 10 15 20 0.5 1 1.5 2 Beta Expected Return...

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