A company estimates that its weighted average cost of capital is 10 percent. Whi

ID: 2630506 • Letter: A

Question

A company estimates that its weighted average cost of capital is 10 percent. Which of the following independent projects should the company accept?

A. Project A requires an up-front expenditure of $1,000,000 and generates a net present value of $3,200.

B. Project B has a payback period of 12 years.

C. roject C requires an up-front expenditure of $1,000,000 and generates a positive internal rate of return of 9.7 percent.

D. Project D has an internal rate of return of 9.5 percent

E. None of the projects above should be accepted.

A. Project A requires an up-front expenditure of $1,000,000 and generates a net present value of $3,200.

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