Practice Problem $11-4$

Over$-$the$-$Top Canopies $($OTC$)$ is evaluating two independent investments. Project S costs $$150,000$ and has an IRR equal to $8$ percent, and Project L costs $$140,000$ and has an IRR equal to $6$ percent. OTC's capital structure consists of $20$ percent debt and $80$ percent common equity, and its component costs of capital are $r_d=5\%,r_S=11\%,$ and $r_e=14\mathrm{.}5\%.$ If OTC expects to generate $$220,000$ in retained earnings this year, which project$($s$)$ should be purchased? Round your answers to one decimal place.

$\backslash$table$[[$Project$,$WACC,Acceptable?$],[$S$,\%,-$ Select$-V,],[$L$,,-$ Select$-V,]]$

Thus, $$ should be purchased.