As a recent MBA graduate, you are involved in the project analysis of your company that has three divisions in different business sectors. Your companys current practice for project analysis is to apply its weighted average cost of capital (WACC) of 12% as a single hurdle rate to all projects across all three divisions.

(a) Criticize your companys current practice of project evaluation; (b) Discuss the long-term consequences of following this practice including with respect to the riskiness of projects to be accepted and rejected; and (c) What alternative practical criteria would you suggest to your boss for project evaluation?