Cedar Computer Systems Inc.has two projects under consideration and a WACC of 10%.Project Alpha has a hurdle rate of 12% while project Beta has a hurdle rate of 8%.If project Alpha has an expected return of 11% and project Beta has an expected return of 11%,which project(s),if any,should the firm accept?

Question

Quizplus · Accepted Answer

Project Beta should be accepted because its expected return of 11% exceeds its hurdle rate of 8%, making it a viable project. Project Alpha should not be accepted because its expected return of 11% is below its hurdle rate of 12%.