Question: Your company is evaluating two projects and has collected the following information: Project AProject BExpected return ( IRR ) 1 2 % 7 % RiskSame

Your company is evaluating two projects and has collected the following information:
Project AProject BExpected return (IRR)12%7%RiskSame as existing businessSame as existing businessSuggested source of financingEquityLong-term debtAfter-tax cost of financing16%5%
The company currently has a capital structure consisting of 30% equity and 70% long-term debt.
without doing any calculations what should the company do and why?

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