Question 25 Your firm has a independent projects under consideration this year. The composite WACC for average risk projects is 7%. The individual risk on each project is account for by adjusting the composite WACC up or down 2.0%. Assuming the following risk, IRR and cost information your firm's optimal capital budget for this year should be: IRR $ Cost Project Risk 8.096 $3,000 1 High 6.0% $2,000 Low 2 3 $2,000 6.5% Average $2,000 $5,000 $0 $4,000 Firm A has a WACC 11 pred with the town cash flow Year Cash flow $277.679 1 $200,000 2 $100,000 Should Firm A accept this project and why? Yes, the MIRR on the project is greater than the weighted average cost of capital. No, the IRR on the project is less than $0. No, the NPV on the project is less than $0. Yes, the NPV on the project is greater than $0. Previous