Weston Industries is considering the following independent projects for the coming year:

Project	Required Investment	Expected Rate of Return	Risk
X	$3 million	10.5%	High
Y	3 million	9.5%	Average
Z	7 million	6.5%	Low

Weston’s WACC is 9 percent, but it adjusts for risk by adding 2 percent to the WACC for high-risk projects and subtracting 2 percent for low-risk projects. Which project(s) should Weston accept assuming it faces no capital constraints?

 

Answer rating: 100% (QA)

To determine which projects Weston should accept we need to calculate the Net Present Value NPV of e... View the full answer