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28 Sep 2019
An all-equity firm is considering the following projects:
Project Beta IRR W .65 9.5 % X .74 10.7 Y 1.33 14.2 Z 1.44 17.3
The T-bill rate is 5.3 percent, and the expected return on themarket is 12.3 percent.
If the firm's overall cost of capital were used as a hurdlerate, Project W would be____(incorrectly rejected, incorrectlyaccepted, correctly rejected, correctly accepted) , Project X wouldbe ____ ((incorrectly rejected, incorrectly accepted, correctlyrejected, correctly accepted) , Project Y would be_____(incorrectly rejected, incorrectly accepted, correctly rejected,correctly accepted) , and Project Z would be ____ (incorrectlyrejected, incorrectly accepted, correctly rejected, correctlyaccepted)
An all-equity firm is considering the following projects: |
Project | Beta | IRR | |||||
W | .65 | 9.5 | % | ||||
X | .74 | 10.7 | |||||
Y | 1.33 | 14.2 | |||||
Z | 1.44 | 17.3 | |||||
The T-bill rate is 5.3 percent, and the expected return on themarket is 12.3 percent.
If the firm's overall cost of capital were used as a hurdlerate, Project W would be____(incorrectly rejected, incorrectlyaccepted, correctly rejected, correctly accepted) , Project X wouldbe ____ ((incorrectly rejected, incorrectly accepted, correctlyrejected, correctly accepted) , Project Y would be_____(incorrectly rejected, incorrectly accepted, correctly rejected,correctly accepted) , and Project Z would be ____ (incorrectlyrejected, incorrectly accepted, correctly rejected, correctlyaccepted)
Deanna HettingerLv2
28 Sep 2019