Question
Vang Inc. estimates that its average-risk projects have a WACC of 10%, its below-average risk projects have a WACC of 8%, and its above-average risk
Vang Inc. estimates that its average-risk projects have a WACC of 10%, its below-average risk projects have a WACC of 8%, and its above-average risk projects have a WACC of 12%.Which of the following projects (A, B, and C) should the company accept?
- Project B is of below-average risk and has a return of 8.5%.
- Project C is of above-average risk and has a return of 11%.
- Project A is of average risk and has a return of 9%.
- None of the projects should be accepted.
- All of the projects should be accepted.
WHY?
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Fundamentals of Multinational Finance
Authors: Michael H. Moffett, Arthur I. Stonehill, David K. Eiteman
5th edition
205989756, 978-0205989751
