13. puval 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 I 14.06, and the corporate composite) macc 1: 12.08. All of Division A's projects are equally risky as are all of Division B's projects. However, the projects of Division are less risky than those of Division B. Which of the following projecte should the firm accept? a. A Division B project with a 138 return. b. A Division B project with a 128 return. c. A Division A project with an 118 return. d. A Division A project with a 98 return. e. A Division B project with an 118 return. 14. which of the following statements is CORRECT? a. The cost of capital used to evaluate a project should be the cost of the specific type of financing used to fund that project, 1.e., it 13 the after-tax cost of debt ir debt is to be used to finance the project or the cost of equity if the project will be financed with equity b. The after-tax cost of debt that should be used as the component cost when calculating the WACC is the average after-tax cost of all the firm's outstanding debt. c. We do not need to adjust the average companywide HACC to evaluate projects in individual department even when the individual departments have different risk level compare to the company. d. The decision not to adjust for risk means that the company will accept too many projects in the department with higher risk and too Cew in departments with lower risk. This will lead to a reduction in the firm's intrinsic value over time. e. The bond-yteld-plus-risk-premium approach is the most sophisticated and objective method for estimating a Tim's cost of equity capital. 15. Barry Company is considering a project that has the following cash Clow and WACC data. what is the project's NPV? Note that a projects projected NPV can be negative, in which case it will be rejected. MACC: 12.000 Year Cash IONS 0 -$1,100 5 $360 $400 $390 $380 5370 a $250.15 b. $277.94 C5305.73 d. 5336.31 e $369.94