WidgetBaker is considering making an acquisition of Risky Widgets. Widgetbaker has a WACC of 12.5%,whereas RiskyWidgets has a WACC of 15.0%.The two firms are funded by the same proportions of debt and equity in their capital structure, which will not change as a result of the acquisition. Which of the following best describes the appropriate discount rate to use to evaluate the acquisition of RiskyWidgets?

Answer rating: 100% (QA)

SOLUTION The appropriate discount rate to use to evaluate the acquisition of RiskyWidgets is the wei... View the full answer