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Strathcona Inc. uses a WACC of 6% for below-average risk projects, 8% for average risk projects, and 10% for above-average risk projects. Which independent project
Strathcona Inc. uses a WACC of 6% for below-average risk projects, 8% for average risk projects, and 10% for above-average risk projects. Which independent project should Strathcona Inc. accept?
a. | Without information about the projects NPVs we cannot determine which one(s) should be accepted. | |
b. | Project C, which has above-average risk and an IRR of 11% | |
c. | Project A, which has average risk and an IRR of 9% | |
d. | Project B, which has below-average risk and an IRR of 5.5% |
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