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 1.7 Calculate the project-specific benchmarks for each project. (Round your answers to 2 decimal places.) Project A: ____.__% Project B: ____.__% Project C: _____.__% Project D: ____.__% If the firm uses its current WACC of 12 percent to evaluate these projects, which project(s), will be incorrectly accepted? Project A Project B Project C Project D
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 1.7 Calculate the project-specific benchmarks for each project. (Round your answers to 2 decimal places.) Project A: ____.__% Project B: ____.__% Project C: _____.__% Project D: ____.__% If the firm uses its current WACC of 12 percent to evaluate these projects, which project(s), will be incorrectly accepted? Project A Project B Project C Project D
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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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.
| Project | Expected Return | Beta |
| A | 8% | 0.6 |
| B | 20 | 1.3 |
| C | 14 | 1.5 |
| D | 18 | 1.7 |
Calculate the project-specific benchmarks for each project. (Round your answers to 2 decimal places.)
Project A: ____.__%
Project B: ____.__%
Project C: _____.__%
Project D: ____.__%
If the firm uses its current WACC of 12 percent to evaluate these projects, which project(s), will be incorrectly accepted?
-
Project A
-
Project B
-
Project C
-
Project D
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