A company with high EBIT is considering pursuing multiple projects next year. Which trade-off is involved, and what is the ideal credit rating for the company between AAA, AA, A, and BBB?

Select an answer:

• The trade-off is only being able to pursue a few of the projects against a lower credit rating, with an AA rating being ideal.

• The trade-off is pursuing more new projects against a lower WACC, with a AAA rating being ideal.

• The trade-off is the risk of a credit downgrade against having few new projects, with a BBB rating as ideal.

• The trade-off is maximizing the number of projects against a higher credit rating, with an A rating being ideal.