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

question 8

Multiple Choice

An all-equity firm is considering the projects shown as follows.
$$\begin{array} { c c } \text { Project } & \text { Expected Return } & \text { Beta } \\\text { A } & 9.0 \%&0.7 \\\text { B } & 20.0 \%& 1.1\\\text { C } & 15.0 \%& 1.5\\\text { D } & 18.0 \%&1.9\end{array}$$
The T-bill rate is 4 percent and the market risk premium is 8 percent. If the firm uses its current WACC of 13 percent to evaluate these projects, which project(s) will be incorrectly accepted?

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

---

Definitions:

Cortisol

A steroid hormone released by the adrenal glands, often in response to stress, that regulates various body functions.

Cushing's Syndrome

A condition caused by prolonged exposure to high levels of cortisol, leading to symptoms like weight gain and high blood pressure.

Diabetes Mellitus

a metabolic disorder characterized by high blood sugar levels over a prolonged period.

Protein Synthesis

The biological process in which cells build proteins based on the genetic instructions carried by mRNA; involves transcription and translation processes.