Help preaty Please An all-equity firm is considering the projects shown below. T

Question

Help preaty

Please An all-equity firm is considering the projects shown below. The T-bill rate is 6 percent and the market risk premium is 9 percent.

Calculate the project-specific benchmarks for each project. (Round your answers to 2 decimal places.)

If the firm uses its current WACC of 16 percent to evaluate these projects, which project(s), will be incorrectly accepted?

Help preaty

Please An all-equity firm is considering the projects shown below. The T-bill rate is 6 percent and the market risk premium is 9 percent.

Explanation / Answer

project-specific benchmarks for each project

Project A = 6% + 0.5*9% = 10.50%

Project B=6% + 1.2*9% = 16.80%

Project C= 6% + 1.4*9% = 18.60%

Project D =6% + 1.6*9% = 20.40%

b)If the firm uses its current WACC of 16 percent to evaluate these projects, which project(s), will be incorrectly accepted?

Project A

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