Question: University Products is evaluating a new venture into home computer systems (see problems 16 and 17). The internal rate of return on the new venture

University Products is evaluating a new venture into home computer systems (see problems 16 and 17). The internal rate of return on the new venture is estimated at 13.4%. WACCs of firms in the personal computer industry tend to average around 14%. Should the new project be pursued? What assumptions must valid to make discounting the cash flows from the proposed venture at University Products' WACC the correct decision? On the other hand, what assumptions must be valid to making discounting the cash flows from the proposed venture at the average WACC of firms in the personal computer industry the correct decision?

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