Your companys WACC is 11%. It is planning to undertake a project with an internal rate of return of 14%, but you believe this project is not a wise investment. What logical arguments would you use to convince your boss to forego the project despite its high IRR. Is it possible that making investments with returns higher than the firms cost of capital will destroy value? If so, how?

What is the market line? Why should a firm reject a projects lying below the market line and accept those lying above the line.