A firm is considering investment in a capital project which is described below. The firm's cost of capital is 18 percent and the risk-free rate is 6...

A firm is considering investment in a capital project which is described below. The firm's cost of capital is 18 percent and the risk-free rate is 6 percent. The project has a risk index of 1.5. The firm uses the following equation to determine the risk adjusted discount rate, RADR, for each project: RADR = RF + Risk Index * (Cost of capital - RF)

The initial investment is $1,000,000 and the cash inflows for years 1-3 are $500,000 each.