Question
A firm estimates that its average-risk projects have a WACC of 10%, its below-average risk projects have a WACC of 9%, and its above-average risk
A firm estimates that its average-risk projects have a WACC of 10%, its below-average risk projects have a WACC of 9%, and its above-average risk projects have a WACC of 12%. Which of the following projects (A, B, and C) should the company accept?
A:Project B is of below-average risk and has a return of 9.5%.
B:Project C is of above-average risk and has a return of 11.5%.
C:Project A is of average risk and has a return of 9%.
D:None of the projects should be accepted.
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Fundamentals Of Corporate Finance
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford
5th Edition
0135811600, 978-0135811603
