8. (5 points) Eyes of the World Corporation has traditionally employed a firm wide discount rate for capital budgeting purposes. However, its two divisions - publishing and entertainment - have different degrees of risk given by BP = 1.0, BE = 2.0, and the beta for the overall firm is 1.3. The firm is considering the following capital expenditures: Proposed Project P1 P2 P3 Initial Investment $1M $3M $2M IRR .130 .121 .090 Publishing Entertainment E 1 E 2 E 3 $4M SOM $5M .160 .170 .140 Which projects would the firm accept if it uses the opportunity cost of capital for the entire company? Which projects would it accept if it estimates cost of capital separately for each division? Use 6% as the risk-free rate and 12% as the expected return on the market