Multiple choice question on wacc

Reference no: EM1373162

Brandon Corporation consists of two divisions of same size, and Brandon is 100% equity financed. Division A cost of equity capital is 9.8%, while Division B cost of equity capital is 14%. Brandon's composite WACC is 11.9%. Assume that all Division A projects have the same risk and that all Division B projects have the same risk. However, the projects in Division A are not the same risk as those in Division B. Which of the following projects should Brandon accept?

a. Division A project with an 11% return.
b. Division B project with a 12% return.
c. Division B project with a 13% return.
d. Statements a and c are correct.
e. all are correct.

Reference no: EM1373162

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