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Puckett Inc. risk-adjusts its WACC to account for project risk. It uses a WACC of 9% for below-average risk projects, 10% for average-risk projects, and
Puckett Inc. risk-adjusts its WACC to account for project risk. It uses a WACC of 9% for below-average risk projects, 10% for average-risk projects, and 12% for above-average risk projects. Which of the following independent, normal orojects should Puckett accept, assuming that the company uses the NPV method when choosing projects? Project B, which has below-average risk and an IRR=8.5%. Project C, which has above-average risk and an IRR=12.5%. Without information about the projects' NPVs we cannot determine which project(s) should be accepted. All of these projects should be accepted. Project D, which has average risk and an IRR=9.5%
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