Question
Leslie Microcomputers is considering the following independent projects for the coming year: Project Required Investment Expected Rate of Return Risk X $4 million 8.5% High
Leslie Microcomputers is considering the following independent projects for the coming year:
| Project | Required Investment | Expected Rate of Return | Risk |
| X | $4 million | 8.5% | High |
| Y | 5 million | 9.5% | Average |
| Z | 3 million | 4.5% | Low |
Leslies WACC is 8 percent, but it adjusts for risk by adding 2 percent to the WACC for high-risk projects and subtracting 2 percent for low-risk projects. Which project(s) should Leslie accept assuming it faces no capital constraints?
| a. | Project Z only | |
| b. | Projects X and Z | |
| c. | Project Y only | |
| d. | Projects Y and Z | |
| e. | Projects X and Y |
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Public Finance In Canada
Authors: Harvey S. Rosen, Wen, Snoddon
4th Canadian Edition
0070071837, 978-0070071834
