Question
A firm has a WACC of 10% until it has raised $100 million. Beyond that the WACC is 12%. The firm has the following projects
A firm has a WACC of 10% until it has raised $100 million. Beyond that the WACC is 12%. The firm has the following projects and associated costs:
Project A has a cost of $50 million and an IRR of 4%; project B has a cost of $70 million and an IRR of 6%; and project C has a cost of $35 million and an IRR of 8%.
Which of these three projects should be rejected?
Group of answer choices
Projects A and B should be rejected.
Projects A and C should be rejected.
Projects B and C should be rejected.
All three projects should be rejected.
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Principles Of Corporate Finance Law
Authors: Eilis Ferran, Look Chan Ho
2nd Edition
0199671354, 978-0199671359
