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Acme Manufacturing Corporation has two divisions, L and H. Division L is the companys low-risk division and would have a weighted average cost of capital

Acme Manufacturing Corporation has two divisions, L and H. Division L is the companys low-risk division and would have a weighted average cost of capital of 9% if it was operated as an independent company. Division H is the companys high-risk division and would have a weighted average cost of capital of 15% if it was operated as an independent company. Because the two divisions are the same size, the company has a composite weighted average cost of capital of 12%. Division H is considering a project with an expected return of 13%.

Acme Manufacturing Corporation should _____? (Reject, Accept) the Division Hs project because its return is _____? (Greater than, Less than, The same as) the risk-based cost of capital for the division.

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