As the CFO of Yo co., you are considering three projects with different levels of risks. You estimate that its below-average risk projects have a WACC of 7%, its average-risk projects have a WACC of 10%, and its above-average risk projects have a WACC of 13%. Which of the following projects should you accept? a. Project A, which is of below-average risk and has a return of 8%. B. Project B, which is of average risk and has a return of 9.5%. C.Project C, which is of above-average risk and has a return of 12%. D. None of the projects should be accepted. E. All of the projects should be accepted.
As the CFO of Yo co., you are considering three projects with different levels of risks. You estimate that its below-average risk projects have a WACC of 7%, its average-risk projects have a WACC of 10%, and its above-average risk projects have a WACC of 13%. Which of the following projects should you accept? a. Project A, which is of below-average risk and has a return of 8%. B. Project B, which is of average risk and has a return of 9.5%. C.Project C, which is of above-average risk and has a return of 12%. D. None of the projects should be accepted. E. All of the projects should be accepted.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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As the CFO of Yo co., you are considering three projects with different levels of risks. You estimate that its below-average risk projects have a WACC of 7%, its average-risk projects have a WACC of 10%, and its above-average risk projects have a WACC of 13%. Which of the following projects should you accept?
a. Project A, which is of below-average risk and has a return of 8%.
B. Project B, which is of average risk and has a return of 9.5%.
C.Project C, which is of above-average risk and has a return of 12%.
D. None of the projects should be accepted.
E. All of the projects should be accepted.
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