Question
Toy is considering three proposed new projects, which have the following characteristics. Toy's WACC is 11% and its beta is 1.4; the risk-free rate is
Toy is considering three proposed new projects, which have the following characteristics. Toy's WACC is 11% and its beta is 1.4; the risk-free rate is 1.5%. Which project or projects would be incorrectly accepted under the WACC cut-off rule? Please explain your work in enough detail to make clear how you're solving the problem.
| Project | IRR | Beta |
| X | 10.50% | 0.8 |
| Y | 16.00% | 1.2 |
| Z | 17.50% | 2.5 |
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Advanced Accounting
Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik
10th edition
0-07-794127-6, 978-0-07-79412, 978-0077431808
