2 The company is considering two projects A and B. Both

projects have conventional cash flows.

Project A has beta of 1.2 and it has an IRR (promised return) of 12.7%.

Project B has a beta of 1.4 and it has an IRR (promised return) of 15.2%.

If the risk-free rate is 5.0% and the market required return is 12%,

which project(s) should the firm take?

(note: these are not mutually exclusive projects)

A)A only

B)B only

C)Neither A nor B

D)Both A and B

E)Cannot be determined without additional information