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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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