Assume that a company consisting of 4 divisions is considering two investment projects, A and B. A is a project of Division 2 and B is a project of Division 4. The cost of capital for each division is as follows:

Division 1

10.9%

Division 2

11.75%

Division 3

15.2%

Division 4

18.43%

Company as a whole

14.9%

If the return on project A is 12.4% and project B is 16.9%, which project(s) will be accepted using the cost of capital derived for each division.

Projects A and B.

Only Project A.

Only Project B.

Neither A nor B.