A Company Estimates That an Average-Risk Project Has a WACC

question 6

Multiple Choice

A company estimates that an average-risk project has a WACC of 10 percent, a below-average-risk project has a WACC of 8 percent, and an above-average-risk project has a WACC of 12 percent. Which of the following independent projects should the company accept?

• A) Project A has average risk and an IRR = 9 percent.
• B) Project B has below-average risk and an IRR = 8.5 percent.
• C) Project C has above-average risk and an IRR = 11 percent.
• D) All of the projects above should be accepted.
• E) None of the projects above should be accepted.

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Definitions:

Fathers

The male parent or guardian of a child, playing a significant role in the child's development and emotional well-being through support and guidance.

Mothers

Female parents who have given birth to, adopted, or in some cases, assumed the primary care of a child.

Negative Symptoms

Features often found in certain mental illnesses, such as schizophrenia, that include a lack or decrease in the ability to function normally, like diminished emotional expression.

Exaggerated

Describes something made to appear larger, more significant, or more important than it actually is, often through overstatement or hyperbole.