John Barleycorn estimates his firms after-tax WACC at only 8%. Nevertheless he sets a 15% companywide discount

Question:

John Barleycorn estimates his firm’s after-tax WACC at only 8%. Nevertheless he sets a 15% companywide to offset the optimistic biases of project sponsors and to impose “discipline” on the capital-budgeting process. Suppose Mr. Barleycorn is correct about the project sponsors, who are in fact optimistic by 7% on average. Will the increase in the from 8% to 15% offset the bias?

Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...