Suppose two all equity-financed firms, Firm X and Firm Y, are considering the same new project that has a beta of 1. The project has an IRR of 9.2%. Firm X has a beta of 1.2 and Firm Y has a beta of 0.9. The risk-free rate is 3% and the expected market risk premium is 6%.  a.) Should Firm X accept the project? Clearly explain, being sure to justify your reasoning. b.) Should Firm Y accept the project? Clearly explain, being sure to justify your reasoning.

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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.