Usually, the weighted average cost of capital is compared to the internal rate of return (IRR) in order to accept or reject capital budgeting projects.

Question

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The weighted average cost of capital (WACC) is compared to the internal rate of return (IRR) to decide on the acceptance or rejection of capital budgeting projects. If the IRR exceeds the WACC, the project is likely to be accepted because it implies the project will generate returns greater than the cost of capital.

Usually, the Weighted Average Cost of Capital Is Compared to the Internal