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Mantap Industries has three projects under consideration. Project L is a lower-than- averagerisk project, project A is an average-risk project, and project H is
Mantap Industries has three projects under consideration. Project L is a lower-than- averagerisk project, project A is an average-risk project, and project H is a higher-than- average-risk project. You have gathered the following information to determine if one or more of these projects has an acceptable rate of return for the firm. Sources of financing 50% debt and 50% equity Rd = 8.00% before taxes . Tax Rate = 30% Average beta for Mantap Industries = 1.0 Rm = 13.00% Rf = 4.00% Adjusted WACC = 9.30% Beta for project L = 0.80, for project A = 1.00, and for project H = 1.20 IRRL = 9.00%, IRRA = 10.00%, and IRRH = 11.00% Calculate the required rate of return for each project and determine which, if any, projects are acceptable to the firm
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