Question: Starbucks wants to use the subjective approach to evaluate a new project. They are considering expanding their stores and renting office space to small business owners. They will have a separate reception area and online scheduling for those that want to use the office space. Starbucks has a WACC of 12%. What would be the WACC for this new project?

Category	Examples	Adjustment Factor
High risk	New products		6	%
Moderate risk	Cost savings, Expansion of existing products		0
Low risk	Replacement of existing equipment		(4	)
Mandatory	Safety equipment		n/a

Multiple Choice

A.) 16%

B.) 12%

C.) 24%

D.) It cannot be determined.

E.) 18%