Vang 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 project (A,B,C,or D) should the company accept?
A) Project B is of below-average risk and has a return of 8.5%.
B) Project C is of above-average risk and has a return of 11%.
C) Project A is of average risk and has a return of 9%.
D) Project A has a below-average risk and has a return of 7.5%.
Correct Answer:
Verified
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