Question
When estimating the dr of a project to calculate the project's NPV, should we use the project's WACC or the firm's WACC? (a) The project's
When estimating the dr of a project to calculate the project's NPV, should we use the project's WACC or the firm's WACC?
(a) The project's WACC because we should discount the project's UFCFs using a discount rate that reflects the project's risk
(b) The project's WACC because we should discount the project's UFCFs using a discount rate that reflects the project's interest tax shield
(c) The firm's WACC because we should discount the project's UFCFs using a discount rate that reflects the cost the firm faces when raising capital
(d) The firm's WACC because we should discount the project's UFCFs using a discount rate that reflects the firm's interest tax shield
(e) Both (a) and (b) are correct
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Investments Analysis And Management
Authors: Charles Jones, Nick Jones
11th Edition
0470477121, 9780470477120
