Which of the following projects should the firm accept

Assignment Help Finance Basics

Reference no: EM13291378

Duval 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 corporate (composite) WACC is 12.0%. All of Division A's projects are equally risky, as are all of Division B's projects. However, the projects of Division A are less risky than those of Division B. Which of the following projects should the firm accept?

Answer

A Division B project with a 13% return.
A Division B project with a 12% return.
A Division A project with an 11% return.
A Division A project with a 9% return.
A Division B project with an 11% return.

Reference no: EM13291378

Questions Cloud

How long does it take for the boat to cross the river : A 300-m-wide river flows due east at a uniform speed of 4.4 m/s. A boat with a speed of 7.6 m/s relative to the water leaves the south bank pointed in a direction 25o west of north. How long does it take for the boat to cross the river

Determine the multimeter ac voltage measurement : If the peak-peak voltage of a sinusoidal waveform extendsvertically 6.4 division and the oscilloscope vertical sensitivitywas set to 0.5 volts/division, what would be the reading of amultimeter using both the AC and DC scales

Describe how would design a gray code counter without vhdl : Explain why the low value (0) for the 'output' of a digital logic gate is lower than the low value for the 'input' of a digital logic gate (This is the case for CMOS and Bipolar logic). Look at a specsheet.

Explain phenol and benzaldehyde : At what position will the electrophilic aromatic substitution occur for the following compounds? bromobenzene, nitrobenzene, benzoic acid, toluene, phenol, and benzaldehyde

Which of the following projects should the firm accept : However, the projects of Division A are less risky than those of Division B. Which of the following projects should the firm accept?

Explain the density of a metal and length of the unit cell : Many metals pack in cubic unit cells. The density of a metal and length of the unit cell can be used to determine the type for packing. For example, gold has a density of 19.32 g/cm3 and a unit cell side length a of 4.08 Å. (1 Å = 1. 10-8 cm.)

What is likely to happen over time : The CEO disagrees, on the grounds that even though projects have different risks, the WACC used to evaluate each project should be the same because the company obtains capital for all projects from the same sources. If the CEO's position is accept..

Design a combinational circuit with three inputs x-y and z : Design a combinational circuit with three inputs x, y, and z andthree ouputs A, B, and C. when binary input is 0,1,2,or 3, the binary output is, one greater than the input. when the binary input4,5,6,or 7, the binary output is one less than the in..

Find the output voltage when rated load with power factor : An 8 pole, three phase 50kVA, 220V, Y connected synchronousgenerator has a synchronous reactance of 4.8ohms per phase andoperates in stand-alone. Neglect all loses. The field voltage isadjusted to give rated voltage across the output terminal at n..

User Account

All Pages