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.

Please answer the question on attached file

Which of the following statements is correct?   a. Since investors prefer more return and less risk, one will never hold a dominated asset in the risk-return sense. In other words, if asset A has a higher expected return and lower standard-deviation than asset B, then investors would only hold asset A in their optimal portfolio.   b. The IRR method correctly ranks mutually exclusive projects.   c. When an investment project is evaluated today, the spending that occurred in the last year has to be included in the NPV analysis.   d. The payback period criterion properly considers the time value of money.   e. When there are two mutually exclusive projects, the project with the highest NPV should be chosen.

Rank the following risky investment projects based on stochastic dominance. Project P Project Q Payoff Probability Payoff Probability 20 0.3 30 0.25 40 0.4 50 0.25 70 0.2 60 0.25 80 0.1 90 0.25