17. An all-equity firm is considering the following projects:

Project Beta IRR

W 0.75 8.9%

X 0.90 10.8%

Y 1.15 12.8%

Z 1.45 13.9%

The T -bill rate is 4 percent, and the expected return on the market is 11 percent.

a. Which projects have a higher expected return than the firm's 11 percent cost of capital?

b. Which project should be accepted?

c. Which projects would be incorrectly acceptedor rejected if the firm's overall cost of capital was used as a hurdle rate?