A company has a cost of equity (Ke) of 18% and a cost of debt (Kd) of 6%. It has 40% debt in it capital structure. It has two investment opportunities of similar risk to its existing business. A costs 4m, will yield 9% and be financed by debt and B costs 6m will yield 15% and be financed by equity. The company should:

a

Accept A alone

b

Accept both projects

c

Accept B alone

d

Accept neither project