$3$

Multiple Choice

$1$ point

Duval Inc. uses only equity capital, and it has two equally$-$sized divisions. Division A$\text{'}$s cost of capital is $10\mathrm{.}0\%,$ Division B$\text{'}$s cost is $14\mathrm{.}0\%,$ and the corporate $($composite$)$ WACC is $12\mathrm{.}0\%.$ All of Division A$\text{'}$s projects are equally risky, as are all of Division B$\text{'}$s projects. However, the projects of Division A are less risky than those of Division B$.$ Which of the following projects should the firm accept?

A Division B project with a $13\%$ return.

A Division B project with a $12\%$ return.

A Division A project with an $11\%$ return.

A Division A project with a $9\%$ return.

A Division B project with an $11\%$ return.