Question
Bloom and Co. has no debt or preferred stock, it uses only equity capital, and has two equally-sized divisions. Division Y's cost of capital is
Bloom and Co. has no debt or preferred stock, it uses only equity capital, and has two equally-sized divisions. Division Y's cost of capital is 10.0%, Division X's cost is 14.0%, and the corporate (composite) WACC is 12.0%. All of Division X's projects are equally risky, as are all of Division Y's projects. However, the projects of Division Y are less risky than those of Division X. Which of the following projects should the firm accept?
Question 10 options:
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| A Division X project with a 12% return. |
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| A Division Y project with an 11% return. |
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| A Division Y project with a 15% return. |
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| all of the above |
|
| none of the above |
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Public Finance And Public Policy
Authors: Arye L. Hillman
2nd Edition
0521738059, 978-0521738057
