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Weston Industries is considering the following independent projects for the coming year: Project Required Investment Expected Rate of Return Risk X $4 million 15.0% High

Weston Industries is considering the following independent projects for the coming year:

Project

Required Investment

Expected Rate of Return

Risk

X

$4 million

15.0%

High

Y

4 million

11.0%

Average

Z

2 million

11.5%

Low

Westons WACC is 12 percent, but it adjusts for risk by adding 2 percent to the WACC for high-risk projects and subtracting 2 percent for low-risk projects. Which project(s) should Weston accept assuming it faces no capital constraints?

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