A Firm Is Considering Expanding Its Current Operations and Has

question 17

Multiple Choice

A firm is considering expanding its current operations and has determined the internal rate of return on that expansion is 12.2%. The firm's WACC is 11.8%. Given this, you know the:

• A) project will have a lower debt-equity ratio than the firm's current operations.
• B) appropriate discount rate for the project is between 11.8% and 12.2%.
• C) project has slightly more risk than the firm's current operations.
• D)expansion should be undertaken as it has a positive net present value.