Your companys weighted-average cost of capital is 11 percent. It is planning to undertake a project with

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Your company’s weighted-average cost of capital is 11 percent. It is planning to undertake a project with an internal rate of return of 14 percent, but you believe this project is not a wise investment. What logical arguments would you use to convince your boss to forego the project despite its high rate of return? Is it possible that making investments with re-turns higher than the firm’s cost of capital will destroy value? If so, how?
Internal Rate of Return
Internal Rate of Return of IRR is a capital budgeting tool that is used to assess the viability of an investment opportunity. IRR is the true rate of return that a project is capable of generating. It is a metric that tells you about the investment...
Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...
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