15. Two projects being considered are mutually exclusive projected cash flows: considered are mutually exclusive and have the following 2 Project A Project B Year Cash Flow Cash Flow 0 -$50,000 -$50.000 25.000 45.000 25.000 10.000 20,000 If the required rate of return on these projects is 10 percent, which chosen and why? A) Project A because it has a shorter payback period. B) Project B because it has the higher IRR. C) Project A because it has a positive and higher NPV. D) Project B because its IRR is higher than the required return. E) Both projects A and B because they both have a positive NPV. 5.000 e projects is 10 percent, which would be 10. A) B) C) D) E) Asset A has an expected return of 14.5% and a beta of 1.15. The risk-free rate is 5%. What is the market risk premium? 8.3% 9.7% 11.5% 12.4% 14.5% B 17. You have a portfolio comprised of the following. If the portfolio beta is 1.25 what is the beta of stock C? Stock Value Beta A $5.000 1.84 $8,000 93 $4.000 $3,000 1.26 A) 0.987 B) 1.006 C) 1.145 D) 1.212 E) 1.309 18. Suppose that your firm has a cost of equity of 18% and a cost of debt of 8%. If the target capital structure includes 40% debt and 60% equity, and the tax rate is 35%, what is the firm's weighted average cost of capital (WACC)? A) 7.4% B) 9.9% C) 12.8% D) 13.2% E) 14.3%