An all-equity firm is considering the following projects:

Project	Beta			IRR
W		.54			10.1	%
X		.91			10.6
Y		1.09			14.1
Z		1.51			17.1

The T-bill rate is 5.1 percent, and the expected return on the market is 12.1 percent.

a.

Compared with the firm's 12.1 percent cost of capital, Project W has a (Click to select)higherlower expected return, Project X has a (Click to select)lowerhigher expected return, Project Y has a (Click to select)lowerhigher expected return, and Project Z has a (Click to select)higherlower expected return.

b.	Project W should be (Click to select)acceptedrejected, Project X should be (Click to select)acceptedrejected, Project Y should be (Click to select)acceptedaccepted, and Project Z should be (Click to select)acceptedrejected.

c.

If the firm's overall cost of capital were used as a hurdle rate, Project W would be (Click to select)incorrectly rejectedcorrectly rejectedcorrectly acceptedcorrectly accepted, Project X would be (Click to select)correctly acceptedincorrectly rejectedcorrectly rejectedcorrectly accepted, Project Y would be (Click to select)incorrectly rejectedcorrectly acceptedcorrectly rejectedcorrectly accepted, and Project Z would be