An All-Equity Firm Is Considering the Projects Shown as Follows

Multiple Choice

An all-equity firm is considering the projects shown as follows. The T-bill rate is 4 percent and the market risk premium is 8 percent. If the firm uses its current WACC of 13 percent to evaluate these projects, which project(s) will be incorrectly accepted? $$\begin{array} { | c | c | c | } \hline \text { Project } & \text { Expected Return } & \text { Beta } \\\hline \mathrm { A } & 9.0 \% & 0.7 \\\hline \mathrm { B } & 20.0 \% & 1.1 \\\hline \mathrm { C } & 15.0 \% & 1.5 \\\hline \mathrm { D } & 18.0 \% & 1.9 \\\hline\end{array}$$

A) Project A
B) Project C
C) Project D
D) Projects C and D