2. A diversified company with no debt has an overall beta of 1.50. However, the company has two divisions with different risk levels. The chemical division (C) has a beta of 2.0 and the garden seed division (G) has a beta of 0.80. At the current time, the risk free rate is 2 percent and the market risk Intermediate Financial Management - FIN 390 - Assignment - Spring 2020 premium is 5 percent. The Chief Financial Officer uses the diversified company's WACC as the hurdle rate for all projects. a. On a graph as shown below, draw the security market line. b. On a graph as shown below, draw a horizontal line at the appropriate position for the diversified company's WACC. c. On a graph as shown below, place a "C" on the horizontal axis at the appropriate position for the chemical division. d. On a graph as shown below, place a "G" on the horizontal axis at the appropriate position for the garden seed division. e. The chemical division has identified two projects with expected returns of 11.5 percent and 12.5 percent. Place an "x" on the graph in the appropriate position for each project. f. The garden seed division has identified two projects with expected returns of 7 percent and 9 percent. Place an "x" on the graph in the appropriate position for each project. g. Using the CFO's criteria, which of the projects will be accepted? Which of the projects should NOT be accepted? Return Beta