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A firm which uses its WACC for average-risk projects adds and subtracts 3 percentage points for above-average and below-average risk projects, respectively. If its WACC
A firm which uses its WACC for average-risk projects adds and subtracts 3 percentage points for above-average and below-average risk projects, respectively. If its WACC is 8%, which of the following projects should be accepted and why? Project 1: E()= 9%; Riskiness: Average; Project 2: E(1)= 9%; Riskiness: Above Average; Project 3: E()= 11%; Riskiness: Average; Project 4: E()= 5%; Riskiness: Below Average; Project 5: E(O)= 8%; Riskiness: Below Average; Project 6: E(r)= 10%; Riskiness: Above Average; O A. Project 3 OB. Project 1 OC. Project 5 OD. Project 6
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