Question: Jackson Inc. uses only equity capital, and it has two equally sized divisions. Division As cost of capital is 10.0%, Division Bs cost is 14.0%,

Jackson Inc. uses only equity capital, and it has two equally sized divisions. Division As cost of capital is 10.0%, Division Bs cost is 14.0%, and the composite WACC is 12.0%. All of Division As projects have the same risk, as do all of Division Bs projects. However, the projects in Division A have less risk than those in Division B. Which of the following projects should Jackson accept?

Question 6 options:

	a Division A project with a 9% return
	a Division B project with a 13% return
	a Division B project with a 12% return
	a Division A project with an 11% return

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