Question 1 (16 marks)

HBS Corporation has no debt and is considering the following projects:

Project

Project	Beta	IRR
1	0.75	6.4%
2	0.80	10.2%
3 4	1.05 1.45	13.1% 11.5%

(a) What would happen if the WACC of the firm were used as a required return of all the projects? Explain. (b) Which project(s) offers a higher expected return than the firms cost of capital? (2 marks) (c) Which projects should be accepted? Explain. (8 marks)