Firm-wide vs. Project-Specifi c WACCs An all-equity firm is considering the projects shown below. 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 rejected?
Project | Expected Return | Beta |
A | 8.0% | 0.5 |
B | 19.0% | 1.2 |
C | 13.0% | 1.4 |
D | 17.0% | 1.6 |
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