I am considering two investment options that are not mutually exclusive. (This means that both of these options can be funded, one of them can be funded, or neither of them might be funded.) If my WACC is 5%, one investment option has a net present value of $20, and the other has a net present value of $50. If my WACC increases to 7%, the net present values then become $0 and $30. What should I do if my WACC is 5% now? What should I do if my WACC doubles to 10%? How does this change my decision?
I am considering two investment options that are not mutually exclusive. (This means that both of these options can be funded, one of them can be funded, or neither of them might be funded.) If my WACC is 5%, one investment option has a net present value of $20, and the other has a net present value of $50. If my WACC increases to 7%, the net present values then become $0 and $30. What should I do if my WACC is 5% now? What should I do if my WACC doubles to 10%? How does this change my decision?
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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I am considering two investment options that are not mutually exclusive. (This means that both of these options can be funded, one of them can be funded, or neither of them might be funded.)
If my WACC is 5%, one investment option has a
If my WACC increases to 7%, the net present values then become $0 and $30.
What should I do if my WACC is 5% now?
What should I do if my WACC doubles to 10%? How does this change my decision?
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