Puckett Inc

question 5

Multiple Choice

Puckett Inc. risk-adjusts its WACC to account for project risk. It uses a risk-adjusted project cost of capital 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 Puckett accept, assuming that the company uses the NPV method when choosing projects?

• A) project b, which has below-average risk and an irr = 8.5%.
• B) project c, which has above-average risk and an irr = 11%.
• C) without information about the projects' npvs we cannot determine which project(s) should be accepted.
• D) all of these projects should be accepted.
• E) project a, which has average risk and an irr = 9%.

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Definitions:

Sound Waves

Vibrations that travel through the air or another medium, which can be heard when they reach a person's or animal's ear.

Middle Ear

The part of the ear between the eardrum and the inner ear that contains three small bones that vibrate to transmit sound.

Contrast Effects

The alteration of perception or judgment of one thing, caused by the recent exposure to a different level of the same or another stimulus.

Absolute Thresholds

Absolute thresholds refer to the minimum intensity of a stimulus that is required for a person to detect its presence 50% of the time.