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An all-equity firm is considering the projects shown below. The treasury bond rate is 4% and the market risk premium is 6%. If the firm
An all-equity firm is considering the projects shown below. The treasury bond rate is 4% and the market risk premium is 6%. If the firm uses its current firm-wide cost of capital of 11% to decide whether to accept or reject each project, which projects will the firm incorrectly accept or reject? Project Forecasted Return Beta A 13.0% 1.6 B 12.0% 1.2 10.0% 0.9 D 8.5% 0.8 O Projects A and B O Project B and D O Projects A and C O Projects A, C, and D O Projects B, C, and D
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