A project with an initial cost of GH¢ 10,000 has the following forecasted cash flows. Years Cash flows 1 4000 2 6000 3 5000 4 3000 The estimated project beta is 1.5 and the market return is 16%. The...

A project with an initial cost of GH¢ 10,000 has the following forecasted cash flows.

The estimated project beta is 1.5 and the market return is 16%. The risk free rate is 7%.

1. Estimate the opportunity cost of capital of the project.


2. What is the CEQ cash flow of the project?


3. What is the ratio of CEQ cash flow to the expected cash flow in each case?


4. Why does this ratio declines?