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QUESTION: With respect to what discount rate the company should use to discount its future cash flows, two opinions emerged: one suggested they should use
QUESTION: With respect to what discount rate the company should use to discount its future cash flows, two opinions emerged: one suggested they should use the required rate of return for the individual projects. The other advocated using the company overall Weighted Average Cost of Capital. What is the Weighted Average Cost of Capital (WACC)? In your opinion, which rate is more appropriate and why? (6 marks)
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