Suppose Tapley Inc. uses a WACC of 8% for below-average risk projects,

QUESTION

Suppose Tapley Inc. uses a WACC of 8% for below-average risk projects, 10% for average-risk projects, and 12% for above-average risk projects. Which of the following independent projects should Tapley accept, assuming that the company uses the NPV method when choosing projects?Answer a.Project A, wh
13) Option (b), should be chosen. (for positive NPV, WACC shall be lower than IRR. At IRR, NPV is zero.) 14) Option (b) is correct. (sunk cost is spent already and has no bearing on whether project is

taken up or not.) 15) option (e) is the ANSWER. (building is already spent cost and its value can not be attributed to the project. )

ANSWER:

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