An all-equity firm is considering the following projects:   Project Beta IRR W .67       9.5 %   X .74       10.6     Y 1.37       14.1     Z 1.48       17.1

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter11: Capital Budgeting And Risk
Section: Chapter Questions
Problem 6P
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An all-equity firm is considering the following projects:

 

Project Beta IRR
W .67       9.5 %  
X .74       10.6    
Y 1.37       14.1    
Z 1.48       17.1    
 

 

The T-bill rate is 5.1 percent, and the expected return on the market is 12.1 percent.

 
a.

Which projects have a higher/lower expected return than the firm’s 12.1 percent cost of capital?

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