1. An all-equity firm is considering the following projects: Project W Beta .60 IRR 8.8% Project X Beta .85 IRR 9.5 Project Y Beta 1.15 IRR 11.9 Project Z Beta 1.45 IRR 15.0. The T-bill rate is 4%, and the expected return on the market is 11%.

a. Which projects have a higher expected return than the firms 11% cost of capital? b. Which projects should be accepted? c. Which projects would be incorrectly accepted or rejected if the firms overall cost of capital were used as a hurdle rate?