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 7 percent. If the firm uses its current WACC of 12 percent to evaluate these projects, which project(s) , if any, will be incorrectly accepted or rejected? $$\begin{array} { | l | l | l | } \hline \text { Project } & \text { Expected Return } & \text { Beta } \\\hline \text { A } & 9.0 \% & 0.6 \\\hline \text { B } & 20.0 \% & 1.2 \\\hline \text { C } & 13.0 \% & 1.4 \\\hline \text { D } & 17.0 \% & 1.5 \\\hline\end{array}$$

A) Project A would be incorrectly rejected.
B) Both Projects A and C would be incorrectly rejected.
C) Project A will be incorrectly rejected and Project B would be incorrectly accepted.
D) None of the projects will be incorrectly accepted or rejected.