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Firm weighted cost of capital

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Galgate is considering project A and project B. Project A has a beta of 0.4 and an expected return of 7%. Project B has a beta of 1.8 and an expected return of 11%. Would you advise the management of Galgate to proceed with the projects? Which project(s) would be incorrectly accepted or rejected if the firm's weighted cost of capital (WACC) is used as a hurdle rate? The market risk premium is 6% and the treasury bills are yielding 4%. The WACC is equal to 0.0876

Reference no: EM132999777

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