Suppose Tapley Inc

question 45

Multiple Choice

Suppose Tapley Inc. uses a WACC of 8% for below-average risk projects, 10% for average-risk projects, and 12% for above-average risk projects. Which of the following independent projects should Tapley accept, assuming that the company uses the NPV method when choosing projects?

• A) Project A, which has average risk and an IRR = 9%.
• B) Project B, which has below-average risk and an IRR = 8.5%.
• C) Project C, which has above-average risk and an IRR = 11%.
• D) Without information about the projects' NPVs we cannot determine which one or ones should be accepted.
• E) All of these projects should be accepted.

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Definitions:

False Pretenses

The act of misrepresenting a fact or situation to deceive or manipulate another person, often to secure unlawful gain.

Objective Fault

A legal standard that determines liability based on failure to meet an objective level of care, regardless of the defendant's intent or knowledge.

Vicarious Liability

A legal principle holding a party responsible for the actions of another, typically applied when an employer is held liable for the actions of an employee.

Corporate Liability

The legal concept that a corporation can be held responsible for the actions of its employees or agents, subject to laws and regulations governing corporate conduct.