Suppose a firm estimates its MCC and IOS schedules for the coming year and finds that they intersect at the point 10 percent, and $10 million What cost of capital should be used to evaluate average projects, high risk projects, and low risk projects ...

Assuming that all projects are equally risky the capital budget should be evaluated ...

Suppose a firm estimates its MCC and IOS schedules for the coming year and finds that they

Question:

Suppose a firm estimates its MCC and IOS schedules for the coming year and finds that they intersect at the point 10 percent, and $10 million. What should be used to evaluate average projects, high-risk projects, and low-risk projects?

Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...