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A firm has a WACC of 15% and the CEO is considering two projects. Project A has a return of 14% and = 0.8. Project

A firm has a WACC of 15% and the CEO is considering two projects. Project A has a return of 14% and = 0.8. Project B has a return of 15.5% and = 1.6. The risk-free rate is 5% and the market risk premium is 7%. If the CEO only uses the firm WACC to evaluate the two projects, which of the following statements is correct?

?

Question 11 options:

Project B will be correctly accepted

Project A will be incorrectly rejected

Project A will be correctly accepted

Project B will be incorrectly rejected

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