Question
Weston Industries is considering the following independent projects for the coming year: Project Required Investment Expected Rate of Return Risk X $7 million 10.5% High
Weston Industries is considering the following independent projects for the coming year:
| Project | Required Investment | Expected Rate of Return | Risk |
| X | $7 million | 10.5% | High |
| Y | 3 million | 11.5% | Average |
| Z | 4 million | 9.5% | Low |
Westons WACC is 10 percent, but it adjusts for risk by adding 2 percent to the WACC for high-risk projects and subtracting 2 percent for low-risk projects. Which project(s) should Weston accept assuming it faces no capital constraints?
a.
Project Z only
b.
Project Y only
c.
Projects X and Y
d.
Project X only
e.
Projects Y and Z
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Healthcare Finance An Introduction To Accounting And Financial Management
Authors: Louis C. Gapenski
5th Edition
1567934250, 978-1567934250
