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Your company has two projects of average risk under consideration. Project A has an initial investment of $350,000 and an IRR of 15%. Project B
Your company has two projects of average risk under consideration. Project A has an initial investment of $350,000 and an IRR of 15%. Project B has an initial investment of $500,000 and an IRR of 18%. The company expects to have $400,000 available for investment. The company has the WACC of 13% if no additional financing raised. In contrast, if it is necessary to raise more capital, the company will finance via common equity and then the WACC will be 16%. Assume that the projects are independent. Which one of the following investment strategy should NOT be considered by the company? Project B only Projects A and B Project A only
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