An All-Equity Firm Is Considering the Projects Shown as Follows

question 72

Multiple Choice

An all-equity firm is considering the projects shown as follows. The T-bill rate is 3 percent and the market risk premium is 6 percent. If the firm uses its current WACC of 12 percent to evaluate these projects, which project(s) will be incorrectly rejected?
$$\begin{array} { c c r } \text { Project } & \text { Expected Return } & \text { Beta } \\\text { A } & 10.0 \% & 0.9 \\\text { B } & 17.0 \% & 1.1 \\\text { C } & 12.5 \% & 1.4 \\\text { D } & 15.0 \% & 2.2\end{array}$$

• A) Project A
• B) Projects B and C
• C) Project D
• D) Project B

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Definitions:

Sequential Intervals

Time periods or sequences that follow one another in a specific, ordered manner.

Apparent Movement

The perception of movement in a static image or between two or more images viewed in quick succession.

Still Pictures

Images that capture a single moment in time without motion, typically photographs or static visual representations.

Motion Pictures

A series of still images which, when shown on a screen, create the illusion of moving images; also known as movies.