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An all equity finance firm is evaluating whether or not they should invest in any of the following four investment projects (W, X, Y, Z):

Assume the risk-free rate is 3.8% and the expected return of the market portfolio is 12.9%.

A) If the firms Weighted average cost of capital (WACC) is 12.9% then what must be its cost of equity capital? % (Round to 2 decimals)

B) What must be the overall beta for the firm? (Round to 2 decimals)

C) The firm's CFO is currently suggesting that they should use their overall WACC of 12.9% as the hurdle rate to evaluate all four projects. Given the expected return of each project and the CFO's suggested policy, which of the four projects would the firm accept and which would it reject? For Project W the firm should:

i) (No answer given)

ii) Reject the project

iii) Accept the project

iv) Be indifferent

For Project X the firm should:

i) (No answer given)

ii) Reject the project

iii) Accept the project

iv) Be indifferent

For Project Y the firm should:

i) (No answer given)

ii) Reject the project

iii) Accept the project

iv) Be indifferent

For Project Z the firm should:

i) (No answer given)

ii) Reject the project

iii) Accept the project

iv) Be indifferent

D)

\begin{tabular}{llllc} & PROJECT & PROJECT & PROJECT & PROJECT \\ & W & X & Y & Z \\ \hline Beta & 0.75 & 0.90 & 1.25 & 1.35 \\ IRR & 11.20% & 11.60% & 14.60% & 17.00% \end{tabular} D) Complete the statements below about what the firm should actually do Round any numerical answers to 2 decimal places). For Project W the firm should use a hurdle rate of % and thus the firm should actually (No answer given) be indifferent reject the project accept the project For Project X the firm should use a hurdle rate of % and thus the firm should actually (No answer given) accept the project reject the project be indifferent For Project Y the firm should use a hurdle rate of % and thus the firm should actually (No answer given) reject the project accept the project be indifferent For Project Z the firm should use a hurdle rate of % and thus the firm should actually (No answer given) be indifferent reject the project accept the project

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