A company uses only equity capital, and it has two equally sized divisions. Division A's cost of

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A company uses only equity capital, and it has two equally sized divisions. Division A's cost of capital is 10.0%, Division B's cost is 14.0%, and the corporate (composite) WACC is 12.0%. All of Division A's projects are equally risky, as are all of Division B's projects. However, the projects of Division A are less risky than those of Division B. Discuss management's decision to accept a Division B project with a 13% return. Did they make the right decision

Posted Date: Jul 11, 2024 02:33 PM

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A company uses only equity capital, and it has two equally sized divisions. Division A's cost of

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