An all-equity firm is considering the following projects: The T-bill rate is 5 percent, and the expected

Question:

An all-equity firm is considering the following projects:

The T-bill rate is 5 percent, and the expected return on the market is 11 percent.
a. Which projects have a higher expected return than the firm€™s 11 percent cost of capital?
b. Which projects should be accepted?
c. Which projects would be incorrectly accepted or rejected if the firm€™s overall cost of capital was used as a hurdle rate?

Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of... Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these...