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Plastic T, Plastic L, and Plastic M. The average Plastic T project has a beta of 0.75 , the average Plastic L project has a
Plastic T, Plastic L, and Plastic M. The average Plastic T project has a beta of 0.75 , the average Plastic L project has a beta of 1.35, and the average Plastic M project has a beta of 1.15 . Sandstorm is currently considering the projects shown in the table below. The current approach is to use the firm's WACC to evaluate all projects, but management sees the wisdom in adopting an objective, subjective, or specific divisional cost of capital approach. The objective divisional cost of capital relies on the historical average cost of capital. The subjective divisional cost of capital uses a scheme that allocates a cost to each division. The allocation management is considering for the subjective divisional costs are as follows: the firm's WACC for Plastic M, the firm's WACC minus 1% for Plastic T, and the firm's WACC plus 3% for Plastic L projects. The specific cost of capital will rely on market trends and information to generate the actual cost of capital for the projects. The expected return to the market is 12.4%, and the risk-free rate is 4.85%. For this group of projects, how much better would it's accept/reject decision be if it used either
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