Pieterse Investment Pty Ltd is evaluating new capital budgeting projects. Their evaluation method involves comparing each project’s risk-adjusted return obtained from the capital asset pricing model (CAPM) with the project’s average rate of return.

They collected the following data: Probabilities 0.40 Project A B C D 4 2 12 -8 0.45 Rates of return (%) 2 6 16 26 0.15 5 12 18 50 Beta -0.5 0.6 896-1 1.1 2.0 The risk-free rate of return is 6% and the market rate of return is 12%. Which projects should be selected?