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 Corporate Finance
Authors: Richard Brealey, Stewart Myers, Alan Marcus, Devashis Mitra, Elizabeth Maynes, William Lim
6th Canadian edition
978-1259024962
