As a recent MBA graduate, you are involved in the project analysis of your company that has
Question:
As a recent MBA graduate, you are involved in the project analysis of your company that has three divisions in different business sectors.
Your company's current practice for project analysis is to apply its weighted average cost of capital (WACC) of 12% as a single hurdle rate to all projects across all three divisions.
Criticize your company's current practice of project evaluation; (b) Discuss the long-term consequences of following this practice including with respect to the riskiness of projects to be accepted and rejected.
What alternative PRACTICAL criteria and approach(es) to measure them would you suggest to your boss for project evaluation?Give a detailed answer and use a company of your choice?
Foundations of Financial Management
ISBN: 978-1259024979
10th Canadian edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta