Firm C has five new products that it must choose to expand its business. The firm's weighted average cost of capital (WACC) has been 17%. The projects are of equal risk, betas (Bs) of 1.7. The risk-free rate is 7% and the market return is expected to be 12%. The five projects are expected to carn return as follows:

Project V: 19%

Project W : 14%

Project X : 18%

Project Y: 17%

Project Z: 15%

a) What is the required rate of return according to the capital asset pricing model (CAPM)? (10 marks)

b) Why the answer from part a) is different from the firm's WACC? Elaborate. (10 marks)

c) Which projects should be accepted? Elaborate. (5 marks)