Project has expected return

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Reference no: EM132038733

An all-equity firm is considering the following projects:

Project Beta IRR

W .59 8.9 %

X .86 9.6

Y 1.14 12.0

Z 1.46 15.1

The T-bill rate is 4.1 percent, and the expected return on the market is 11.1 percent.

a. Compared with the firm's 11.1 percent cost of capital, Project W has a expected return, Project X has a expected return, Project Y has a expected return, and Project Z has a expected return.

b. Project W should be , Project X should be , Project Y should be , and Project Z should be .

c. If the firm's overall cost of capital were used as a hurdle rate, Project W would be , Project X would be , Project Y would be , and Project Z would be.

Reference no: EM132038733

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