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Safe Shield Inc. is considering the following projects. The T-bill rate is 2.5%, and the expected return on the market is 14%. Safe Shield Inc.
Safe Shield Inc. is considering the following projects. The T-bill rate is 2.5%, and the expected return on the market is 14%. Safe Shield Inc. is an all-equity firm and has an overall cost of capital of 10%. Which project(s) should the firm accept?
Project | Beta | IRR (actual project return) |
A | 0.6 | 9.8% |
B | 0.8 | 11% |
A. Accept A, Reject B,
B. Reject A, Accept B
C. Accept both A and B
D. Reject both A and B
E. Not enough information to determine
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