a firm is considering investment in an asset which is described below. the firm's cost of capital is 18 percent. the market risk premium is 12 percent, and the risk-free rate is 6 percent. the asset beta is 1.5. the firm uses the capm to determine the risk adjusted discount rate. tableau3 ( (initial investment $1,000,000 year cash inflow)( 1 $500,000 2 500,000 3 500,000) ) the discount rate that should be used in the net present value calculation to compensate for risk is .
