An all-equity firm is considering the projects shown below. The T-bill rate is 3 percent and the market risk premium is 8 percent. PROJECT EXPECTED RETURN BETA A 8 % 0.6 B 20 1.3 C 14 1.5 D 18
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An all-equity firm is considering the projects shown below. The T-bill rate is 3 percent and the market risk premium is 8 percent. |
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PROJECT |
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EXPECTED RETURN |
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BETA |
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A |
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8 |
% |
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0.6 |
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B |
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20 |
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1.3 |
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C |
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14 |
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1.5 |
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D |
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18 |
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1.7 |
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Calculate the project-specific benchmarks for each project. (Round your answers to 2 decimal places.) |
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|
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Project A |
% |
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Project B |
% |
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Project C |
% |
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Project D |
% |
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If the firm uses its current WACC of 12 percent to evaluate these projects, which project, will be incorrectly rejected? |
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