Using the WACC to Evaluate All Projects May Lead Managers

question 33

Essay

Using the WACC to evaluate all projects may lead managers into accepting high-risk projects that do not compensate adequately for risk and into rejecting low-risk projects that compensate fully for the level of risk but may not have particularly high rates of return.Describe the situations when using a WACC is not appropriate and how these incorrect decisions may be made.

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Definitions:

Action Verbs

Verbs used to describe actions taken by a subject, often used in resumes and job descriptions to showcase achievements and capabilities.

Adjectives

Words used to describe or modify nouns and pronouns, providing more details about their qualities or quantities.

Research Phase

The stage in a project or study where information is gathered and analyzed to support or refute a hypothesis.

Decision Making

The process of making choices or determining a course of action from several possibilities.