Company has a corporate WACC of 10 You propose investing in a new project that has very little risk with an internal rate of return (IRR) of 8 Your boss asks, How can the project possibly have a positive NPV if its IRR is less than our WACC What is your answer ...

If the project is risk free and if the risk free rate is l ...

Company has a corporate WACC of 10%. You propose investing in a new project that has very

Question:

Company has a corporate WACC of 10%. You propose investing in a new project that has very little risk with an (IRR) of 8%. Your boss asks,“ How can the project possibly have a positive NPV if its IRR is less than our WACC?” What is your answer?
Internal Rate of Return
Internal Rate of Return of IRR is a capital budgeting tool that is used to assess the viability of an investment opportunity. IRR is the true rate of return that a project is capable of generating. It is a metric that tells you about the investment...