Projects have the same risk

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Reference no: EM131300277

Jackson Inc. uses only equity capital, and it has two equally sized divisions. Division A’s cost of capital is 10.0%, Division B’s cost is 14.0%, and the composite WACC is 12.0%. All of Division A’s projects have the same risk, as do all of Division B’s projects. However, the projects in Division A have less risk than those in Division B. Which of the following projects should Jackson accept?

a Division A project with a 9% return

a Division B project with a 13% return

a Division B project with a 12% return

a Division A project with an 11% return

Reference no: EM131300277

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