An all-equity firm is considering the following projects:projectBetaIRRW.809.46.9510.9%Y11513.0%1.4514.296The T-bill rate is 3.5 percent, and the expected return on the market is 11 percent. (Market riskpremium=11%-3.5%) Which projects would be incorrectly accepted or rejected if the firm's overall cost ofcapital (119%) was used as a hurdle rate?AProject Z is incorrectiy rejected, and project Y is incorrectly accepted.B. Project W is incorrectiy rejected, and project Y is incorrectly accepted.C. Project X is incorrectly rejected, and project Z is incorrectly accepted.D. Project X is incorrectly rejected, and project W is incorrectly accepted

An all-equity firm is considering the folowing projects: project Beta IRR W 80 9.4% .95 10.9% Y 115 13.0% 1.45 14.26 The T-bill rate is 3.5 percent, and the expected return on the market is 11 percent. (Market risk premium=116-3.596) Which projects would be incorrectly accepted or rejected if the firm's overall cost of capital (116) was used as a hurdle rate? AProject Z is incorrectly rejected, and project Y is incorrectiy accepted. B. Project W is incorrectiy rejected, and project Y is incorrectly accepted. C. Project X is incorrectly rejected, and oroject 2 is incorrectly accepted. D. Project X is incorrectly rejected, and project W is incorrectiy accepted

An all-equity firm is considering the folowing projects: project Beta IRR W 80 9.4% .95 10.9% Y 115 13.0% 1.45 14.26 The T-bill rate is 3.5 percent, and the expected return on the market is 11 percent. (Market risk premium=116-3.596) Which projects would be incorrectly accepted or rejected if the firm's overall cost of capital (116) was used as a hurdle rate? AProject Z is incorrectly rejected, and project Y is incorrectiy accepted. B. Project W is incorrectiy rejected, and project Y is incorrectly accepted. C. Project X is incorrectly rejected, and oroject 2 is incorrectly accepted. D. Project X is incorrectly rejected, and project W is incorrectiy accepted

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Q¹
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