The appropriate measure of risk for a diversified portfolio is beta.

Dragon Flights Ltd. is a premium adventure tourism company known for offering high-flying dragon rides across volcanic mountains and ancient kingdoms. To expand its elite fleet, the company is considering the purchase of a new fire-breathing dragon, specially bred for long-haul flights and crowd-pleasing aerial acrobatics.The initial investment required for acquiring, training, and outfitting the dragon is $6.2 million.Based on projected bookings and merchandise sales, the company expects the dragon to generate $1.5 million in net cash flow in its first year of operation. After that, thanks to growing popularity and ticket price hikes, cash flows are expected to grow by 5.15% annually.Dragons in commercial use typically remain flight-worthy for 6 years, after which they retire to the Royal Dragon Preserve. If the cost of capital is 9.23%, what is the Net Present Value (NPV) of this legendary investment? Hint: Enter your answer rounded to two decimal places.

Estimating ________ is one part of managing short-term cash needs. The second part is estimating ________.

The best rule for choosing projects when a firm has a limited amount of funds is to accept the group of projects with the greatest combined ________.

The expected return for a portfolio without borrowing

Manta Lasers Co., a mid-sized tech manufacturer specializing in precision laser equipment, has spent the past two years in R&D developing a new, highly efficient industrial laser designed for use in surgical manufacturing and aerospace applications. Based on successful prototype testing and positive early interest from potential clients, the company is now considering moving forward with production.The required upfront investment for production and launch is $1,110,000.Drawing from historical data and market analysis, the firm has forecasted the following annual free cash flows from the project over the next six years (after all operating and capital expenses):Year 1 to Year 6: $200,000, $250,000, $275,000, $300,000, $350,000,  and $400,000. If the company’s cost of capital is 12.65%, what is the Net Present Value (NPV) of this investment? Hint: Enter your answer rounded to two decimal places.

Changes in working capital are considered insignificant and thus ignored when considering capital projects.

The adjusted WACC is the correct discount rate to use when evaluating a firm’s average-risk projects.

If you were to compare the returns of an individual stock to a market index, select the answer below that is most true.

Working capital does NOT depreciate like capital assets.