Assume both portfolios A and B are well diversified, that E(rA) = 15.0% and E(rB) = 16.8%. If the economy has only one factor, and βA = 1 while βB = 1.2, what must be the risk-free rate?

Aproject currently generates sales of $14 million, variable costs equal 50% of sales, and fixed costs are $2.8 million. the firm’s tax rate is 40%. assume all sales and expenses are cash items. (a). what are the effects on cash flow, if sales increase from $14 million to $15.4 million? (input the amount as positive value. enter your answer in dollars not in (b) what are the effects on cash flow, if variable costs increase to 60% of sales? (input the amount as positive value. enter your answers in dollars not in millions). cash flow (increase or decrease) by $