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Q8. Security Market Line and Weighted Average Cost of Capital. An all-equity firm is considering...

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Finance

Q8. Security Market Line and Weighted Average Cost of Capital. An all-equity firm is considering the following projects:

Project

Beta

Expected return

W

0.79

9.7

%

X

0.92

8.5

Y

1.14

10.3

Z

1.34

13.4

The T-bill rate is 7 percent, and the expected return on the market is 10 percent.

Which projects should be accepted? Type in the number corresponding to your answer.

a. Projects X and Y

b. Projects W and X

c. Projects W and Z

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