LaPango Inc. estimates that its average-risk projects have a WACC of 10%, its be
ID: 2705916 • Letter: L
Question
LaPango Inc. estimates that its average-risk projects have a WACC of 10%, its below-average risk projects have a WACC of 8%, and its above-average risk projects have a WACC of 12%. Which of the following projects (A, B, and C) should the company accept? AnswerProject B, which is of below-average risk and has a return of 8.5%.
Project C, which is of above-average risk and has a return of 11%.
Project A, which is of average risk and has a return of 9%.
None of the projects should be accepted.
All of the projects should be accepted. LaPango Inc. estimates that its average-risk projects have a WACC of 10%, its below-average risk projects have a WACC of 8%, and its above-average risk projects have a WACC of 12%. Which of the following projects (A, B, and C) should the company accept? LaPango Inc. estimates that its average-risk projects have a WACC of 10%, its below-average risk projects have a WACC of 8%, and its above-average risk projects have a WACC of 12%. Which of the following projects (A, B, and C) should the company accept? Project B, which is of below-average risk and has a return of 8.5%. Project C, which is of above-average risk and has a return of 11%. Project A, which is of average risk and has a return of 9%. None of the projects should be accepted. All of the projects should be accepted.
Project B, which is of below-average risk and has a return of 8.5%.
Project C, which is of above-average risk and has a return of 11%.
Project A, which is of average risk and has a return of 9%.
None of the projects should be accepted.
All of the projects should be accepted.
Explanation / Answer
Project B, which is of below-average risk and has a return of 8.5%.
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