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Takelmer Industries has a different WACC for each of three types of projects. Lowminusrisk projects have a WACC of​ 8.00%, averageminusrisk projects a WACC of​ 10.00%, and highminusrisk projects a WACC of​ 12%. Which of the following projects do you recommend the firm​ accept?Project Level of Risk IRRA Low ​9.50%B Average ​8.50%C Average ​7.50%D Low ​9.50%E High ​14.50%F High ​17.50%G Average ​11.50%

Respuesta :

hyderali230

Answer:

A,D,E,F &G

Explanation:

IRR is the discount rate at which the Net Present value of a project becomes zero and over this rate the Net present value become negative. All the Projects with IRR Less than the relevant WACC will not be acceptable.

WACC

High = 12%

Average = 10%

Low = 8%

Compare all of the above WACC with each of the relevant WACC to find whether a project is acceptable or not.

Project Level of Risk IRR    Relevant WACC     Acceptable

A             Low ​       9.50%                8%                    Yes

B           Average   ​8.50%                10%                  No

C           Average   ​7.50%                10%                  No

D           Low          ​9.50%                8%                  Yes

E           High         ​14.50%                12%                  Yes

F           High         ​17.50%                12%                  Yes

G           Average  ​11.50%                10%                  Yes

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