Business, 01.07.2020 15:01 bnnn

An all-equity firm is considering the following projects: Project Beta IRR
W .62 9.2 %
X .77 10.3
Y 1.27 14.1
Z 1.42 17.0
The T-bill rate is 5 percent, and the expected return on the market is 12 percent.
A. Compared with the firm's 12 percent cost of capital, Project W has aexpected return.
a. lower
b. higher
1. Project X has aexpected return.
a. higher
b. lower
2. Project Y has aexpected return
a. lower
b. higher
3. Project Z has aexpected return.
a. higher
b. lower
B. Project W should be.
a. accepted
b. rejected
1. Project X should be.
a. accepted
b. rejected
2. Project Y should be.
a. accepted
b. rejected
3. Project Z should be.
a. accepted
b. rejected
c. If the firm's overall cost of capital were used as a hurdle rate, Project W would be.
a. correctly accepted
b. incorrectly rejected
c. correctly rejected
d. incorrectly accepted
1. Project X would be.
a. correctly accepted
b. incorrectly accepted
c. correctly rejected
d. incorrectly rejected
2. Project Y would be.
a. correctly rejectedin
b. correctly accepted
c. incorrectly rejected
d. correctly accepted
3. Project Z would be.
a. incorrectly accepted
b. correctly rejected
c. incorrectly rejected
d. correctly accepted.

Answers: 1

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An all-equity firm is considering the following projects: Project Beta IRR
W .62 9.2 %