Academic Integrity: tutoring, explanations, and feedback — we don’t complete graded work or submit on a student’s behalf.

Project Size Rate of Return A $1million 12.0% B 2million 11.5 C 2million 11.2 D

ID: 2662336 • Letter: P

Question

           Project                                 Size                                          Rate of Return

              A                                    $1million                                         12.0%

             B                                      2million                                         11.5

             C                                      2million                                         11.2

             D                                      2million                                         11.0

             E                                       1 million                                         10.7

              F                                       1million                                         10.3

             G                                         1million                                       10.2

Assume that each of these projects is just as risky as thefirm’s existing assets and that the firm may accept all theprojects or only some of them. Which set of projects should beaccepted? Explain.

Explanation / Answer

Project                                 Size                                          Rate of Return

              A                                    $1million                                         12.0%

             B                                      2million                                         11.5

             C                                      2million                                         11.2

             D                                      2million                                         11.0

             E                                       1 million                                         10.7