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Delta Industries has an overall (composite) Weighted Average Cost of Capital (WACC)

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Delta Industries has an overall (composite) Weighted Average Cost of Capital (WACC) of 10 percent. This cost of capital reflects the cost of capital for a Delta project with average risk, however, there are large differences among the projects. The company estimates that low-risk projects have a cost of capital of 8 percent and high-risk projects have a cost of capital of 12 percent. The company is considering the following projects;Project Expected Return Risk;A 15% High;B 12 Average;C 11 High;D 9 Low;E 6 Low;Which of the projects will the company select?;Additional Requirements;Level of Detail: Show all work

 

Paper#25407 | Written in 18-Jul-2015

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