FG Ltd. is appraising a one-year investment plan, which requires an initial outlay of 1,00,000. At the end of term, it will be matured at 1,25,000.…

CA Intermediate · Financial Management and Strategic Management · PYQS · May 2026
FG Ltd. is appraising a one-year investment plan, which requires an initial outlay of 1,00,000. At the end of term, it will be matured at 1,25,000. The plan has a beta of 1.3, risk free rate of return 10% and market rate of return 18%. Calculate the required rate of return and decide whether the plan is worthwhile.
(A) 25%, The plan is not worthwhile.
(B) 20.4%, The plan is not worthwhile.
(C) 20.4%, The plan is worthwhile.
(D) 25%, The plan is worthwhile.

Suggested Answer and Working Notes:

Correct Answer: Option (C)

20.4%, The plan is worthwhile.

Topics: Part-A: Financial Management

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