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Over-the-Top Canopies (OTC) is evaluating two independent investments. Project S costs $175,000 and has an IRR equal to 12 percent, and Project L costs $165,000
Over-the-Top Canopies (OTC) is evaluating two independent investments. Project S costs $175,000 and has an IRR equal to 12 percent, and Project L costs $165,000 and has an IRR equal to 11 percent. OTC's capital structure consists of 20 percent debt and 80 percent common equity, and its component costs of capital are rdT = 3%, rs = 8%, and re = 10.5%. If OTC
expects to generate $270,000 in retained earnings this year, which project(s) should be purchased? Round your answers to one decimal place.
whats thw WACC For both projects are they both acceptable?
which one should be purchased?
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