A corporation is evaluating the following projects. The companys WACC is 10.50%. If the projects are NOT
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Question:
A corporation is evaluating the following projects. The companys WACC is 10.50%.
- If the projects are NOT mutually exclusive, which should it accept?
- If the projects ARE mutually exclusive, which should it accept?
- If the company risk-adjusts WACC by +/- 2% for High & low risk projects, which should it accept?
- If the company is capital rationing, with a limit of $10M, which risk-adjusted projects should it accept?
| PROJECT | IRR | RISK | Inv $ | 1 | 2 | 3 | 4 | |
| A | 9.92% | AVG | $2M | |||||
| B | 8.65% | LOW | $5M | |||||
| C | 11.50% | HIGH | $3M | |||||
| D | 12.34% | HIGH | $4M | |||||
| E | 10.98% | AVG | $3.5M | |||||
| F | 7.50% | LOW | $2.5M |
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