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Which projects should be accepted

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Question: SML and WACC. An all-equity firm is considering the following projects:

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The T-bill rate is 4 percent, and the expected return on the market is 11 percent.

a. Which projects have a higher expected return than the firm's 11 percent cost of capital?

b. Which projects should be accepted?

c. Which projects will be incorrectly accepted or rejected if the firm's overall cost of capital were used as a hurdle rate?

Reference no: EM131732788

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